Question

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		30%
Large scented		40%

What is the weighted-average contribution margin ratio?

Weighted-average contribution margin ratio

Enter weighted-average contribution margin in percentages %

eTextbook and Media

If the company’s fixed costs are $423,640 per year, what is the dollar amount of each type of candle that must be sold to break even?

		Birthday		Standard tapered		Large scented
Total break-even point		$Enter a dollar amount		$Enter a dollar amount		$Enter a dollar amount

Answer 1

Answer-The weighted-average contribution margin ratio =28%.

Explanation-Weighted average contribution margin ratio =Contribution margin ratio* Sales mix percentage

= (20%*30%)+(30%*60%)+(40%*10%)

= 6%+18%+4%       

= 28%

Answer-The dollar amount of each type of candle that must be sold to break even =$1513000.

Explanation- Dollar sales to attain break-even = Fixed costs/ Weighted average contribution margin ratio

= $423640/28%

= $1513000

Break-even point- Birthday = $1513000*30%= $453900.

Standard tapered = $1513000*60%= 907800.

Large scented = $1513000*10%= $151300