Question
In: Accounting
Dixie Candle Supply makes candles. The sales mix (as a percentage of total dollar sales) of...
Dixie Candle Supply makes candles. The sales mix (as a percentage of total dollar sales) of its three product lines is birthday candles 30%, standard tapered candles 60%, and large scented candles 10%. The contribution margin ratio of each candle type is shown below.
Candle Type Contribution Margin Ratio
Birthday 20%
Standard tapered 35%
Large scented 50%
What is the weighted-average contribution margin ratio?
If the company’s fixed costs are $554,880 per year, what is the
dollar amount of each type of candle that must be sold to break
even?
Solutions
Expert Solution
The weighted-average contribution margin is 32%.
The sales amount required to break-even is $520,200, $1,040,400 and $173,400 for birthday candles, standard tapered candles, and large scented candles.
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