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Eva8 [605]
3 years ago
5

Sheridan Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports G

ear. Sheridan incurs $7215000 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
a. $18037500.
b. $19500000.
c. $2669550.
d. $16779070.
Business
2 answers:
BigorU [14]3 years ago
7 0

Answer:

b. $19500000.

Explanation:

Break-even point is the level of sales on which business has no profit no loss situation. The business only covers the variable and fixed cost at this point.

Total Contribution can be determined by calculating adding estimated contribution of each division.

Total Contribution ratio = (65% x 30%) + (35% x 50%) = 19.5% + 17.5% = 37%

Fixed cost = $7,215,000

Break-even point = Fixed cost / Contribution margin ratio = $7,215,000 / 37% = $19,500,000

Rama09 [41]3 years ago
7 0

Answer:

The break even in dollars is $19500000 and option B is the correct answer.

Explanation:

The break even point in dollars is the amount of revenue where total revenue equals total cost. It is the amount of revenue which produces no profit or no loss. The break even in dollars is calculated by dividing the fixed cost by the weighted average contribution margin ratio.

Break even in dollars = Fixed costs / Weighted average contribution margin ratio

Weighted average contribution margin ratio is the contribution margin ratio of each products multiplied by the products weight in the sales mix.

Weighted average contribution margin ratio = Weight in sales mix of Product A * contribution margin ratio of product A + Weight in sales mix of Product B * Contribution margin ratio of Product B

Weighted average contribution margin ratio = 0.65 * 0.3 + 0.35 * 0.5  = 0.37

Break even in dollars = 7215000 / 0.37

Break even in dollars = $19500000

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Question:

Here is the complete question:

Marian, a top graduate from Loyola in Humanities, was hired by a major corporation into a management position. Marian finished the corporation's management training program top in her group, and is performing above the norm in her position. She is really enjoying her work.

As a woman she feels isolated, as there are no other women managers and few women in her area. One night at a company party she heard a conversation between two of her male co-workers and their supervisor. They were complaining to him about Marian's lack of qualifications and her unpleasant personality. They cursed affirmative action regulations for making the hiring of Marian necessary.

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b. No, Marian co-workers are not correct with regards to their evaluation. She has sufficient and good qualifications which was the reason she got the job and she is also performing well. Also, Marian does not have an unpleasant personality but rather feels isolated because she is the only woman. Her colleagues should help her out in order to deal with the situation.

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d. No, Marian should not file a discrimination suit. The comments made by her co-workers were not discriminatory but rather she was misunderstood at work due to her reserved personality. She should relate better with her colleagues, be social and also build a bond with her colleagues.

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f. Marian should become social and be more friendly with her colleagues. She should talk and relate with her male colleagues. She can discuss work related issues with them and sometimes offer a helping hand. This would help build a bond.

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