To calculate the overall weighted-average contribution margin ratio, multiply each product's contribution margin ratio by its sales revenue and divide by the total sales revenue. Use the formulas provided to calculate the total sales revenue needed to break even or generate a profit, as well as the sales revenue from each product needed to generate a specific profit.
- To calculate the overall weighted-average contribution margin ratio, you need to know the contribution margin ratio for each product, as well as the sales revenue generated by each product.
- The weighted-average contribution margin ratio is calculated by multiplying each product's contribution margin ratio by its sales revenue, then adding these values together and dividing by the total sales revenue.
- To determine the total sales revenue Juniper needs to break even, you can use the formula:
Total Sales Revenue = Fixed Costs / Weighted-Average Contribution Margin Ratio
To generate a profit of $90,000, you can use the formula:
Total Sales Revenue = (Fixed Costs + Desired Profit) / Weighted-Average Contribution Margin Ratio
To determine the sales revenue from each product needed to generate a profit of $90,000, you can use the formula:
Product Sales Revenue = (Product Contribution Margin Ratio * Desired Profit + Fixed Costs) / Weighted-Average Contribution Margin Ratio