Question

Swifty Corporation has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swifty incurs $7192800 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. The weighted-average contribution margin ratio is

Answer 1

37.00%

Step-by-step explanation:

The computation of the weighted average contribution margin ratio is shown below:

Particulars Sporting Goods Sports Gear Total

Contribution Margin Ratio 30% 50%

Sales Mix - Weights 65% 35%

Weighted Contribution Margin 19.50% 17.50% 37.00%

We simply multiplied the contribution margin ratio with the sales mix weighted so that the weighted contribution margin ratio could come