Swanson Company has two divisions; Sporting Goods and Sports Gear.The sales mix is 65% for Sporting Goods and 35% for Sports Gear.Swanson incurs $4,440,000 in fixed costs.The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%.
-The break-even point in dollars is
A)$1,642,800.
B)$10,325,582.
C)$11,100,000.
D)$12,000,000.

Question

Quizplus · Accepted Answer

The break-even point in dollars is calculated by dividing the total fixed costs by the weighted average contribution margin ratio. The weighted average contribution margin ratio is (0.65 * 0.30) + (0.35 * 0.50) = 0.365. Therefore, the break-even point is $4,440,000 / 0.365 = $12,164,384. However, the closest option provided is $12,000,000.

Swanson Company Has Two Divisions; Sporting Goods and Sports Gear