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Social ScienceSheffield Corp. has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% forSporting Goods and 35% for Sports Gear. Sheffield incurs $7770000 in fixed costs. Thecontribution margin ratio for Sporting Goods is 30% , while for Sports Gear it is 50%. What willbe the total contribution margin at the break-even point?$6685814.$9030000.O $7840000.O $7770000.
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Sheffield Corp. has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Sheffield incurs $7770000 in fixed costs. The contribution margin ratio for Sporting Goods is 30% , while for Sports Gear it is 50%. What will be the total contribution margin at the break-even point? $6685814. $9030000. O $7840000. O $7770000.
Expert Answer
Calculate the weighted average contribution margin.
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Sporting Sports goods 30% 65% Particulars Total gear 50% 35% Contributi on Mar gin Rati o Sales Mix Weighted Contribution Margin Per Unit (Contribution margin per unit xSales Mix) 19.50% 17.50% 37.00 %
Calculate the breakeven sales.
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Fixed cost Break-even sales Weighted average contribution margin $7770000 37% $21000000
Calculate the total contribution margin at ...
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Contribution margin = 379% of 21000000 =$7770000
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