Kooi Papery makes cards for special occasions. The sales mix (as a percent of total dollar sales) of its three product fines is: birthday cards 40%, thank you cards 35%, and wedding cards 25%. The contribution margin ratio of each card type is shown below:
|
Card Type |
Contribution Margin Ratio |
|
Birthday |
20% |
|
Thank you |
30% |
|
Wedding |
25% |
(a) What is the weighted average contribution margin ratio?
(b) If the company”s fixed costs are $297,000 per year: what is the dollar amount of each type of card that must be sold to break even?