Question

Bramble Corp. has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Bramble incurs $6750000 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%

Step-by-step explanation:

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

= Contribution margin ratio × weightage

= 30 × 65% + 50 × 35%

= 37%

We simply multiplied the contribution margin ratio with the weightage so that the weighted-average contribution margin ratio could come and the same to be considered