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%.
-What will sales be for the Sporting Goods Division at the break-even point?

Question

Quizplus · Accepted Answer

To find the break-even sales for the Sporting Goods Division, calculate the weighted average contribution margin ratio: (0.65 * 30%) + (0.35 * 50%) = 37%. Then, calculate total sales at break-even: $4,440,000 / 37% = $12,000,000. Finally, find the sales for Sporting Goods: $12,000,000 * 65% = $7,800,000.

Swanson Company Has Two Divisions; Sporting Goods and Sports Gear