Question

Marigold Corp. has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Marigold incurs $5735000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. The break-even point in dollars is

Answer 1

Answer:

Break-even point (dollars)= $15,500,000

Explanation:

Giving the following information:

The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Marigold incurs $5735000 in fixed costs.

The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%

To calculate the break-even point in dollars, we need to use the following formula:

Break-even point (dollars)= Total fixed costs / Weighted average contribution margin ratio

Break-even point (dollars)= 5,735,000 / (0.3*0.65 + 0.5*0.35)

Break-even point (dollars)= $15,500,000