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?

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.

ekkarill92 answered 2 years ago

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