Question
Asked Nov 2, 2019
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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.
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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.

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Expert Answer

Step 1

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 %

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Step 2

Calculate the breakeven sales.

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Fixed cost Break-even sales Weighted average contribution margin $7770000 37% $21000000

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Step 3

Calculate the total contribution margin at ...

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Contribution margin = 379% of 21000000 =$7770000

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