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Ed Green Corporation has two divisions; Outdoor Sports and Indoor Sports.The sales mix is 60% for Outdoor Sports and 40% for Indoor Sports.Green incurs $2,420,000 in fixed costs.The contribution margin ratio for the Outdoor Sports Division is 40%, while for the Indoor Sports Division it is 50%.
-The weighted-average contribution margin ratio is

Question

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Ed Green Corporation has two divisions; Outdoor Sports and Indoor Sports.The sales mix is 60% for Outdoor Sports and 40% for Indoor Sports.Green incurs $2,420,000 in fixed costs.The contribution margin ratio for the Outdoor Sports Division is 40%, while for the Indoor Sports Division it is 50%.
-The weighted-average contribution margin ratio is

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The weighted-average contribution margin ratio is calculated by multiplying each division's contribution margin ratio by its sales mix percentage and then adding the results together: (0.60 * 40%) + (0.40 * 50%) = 24% + 20% = 44%.

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