Vargo Video sells not only DVD players but TV sets as well. Vargo sells its two products in the following amounts: 1,500 DVD players and 500 TVs. The sales mix, expressed as a function of total units sold, is as follows.
Kale Garden Supply Company has two divisions—Indoor Plants and Outdoor Plants. Each division has hundreds of different types of plants and plant care products.
|
Indoor Plant Division |
Outdoor Plant Division |
Total |
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|
Sales |
$200,000 |
$800,000 |
$1,000,000 |
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|
Variable costs |
120,000 |
560,000 |
680,000 |
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|
Contribution margin |
$80,000 |
$240,000 |
$320,000 |
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|
Sales mix percentage(Division sales ± Total sales) |
$200,000/$1,000,000 |
0.20 |
$800,000/$1,000,000 |
0.80 |
||
|
Contribution margin ratio(Contribution margin ± Sales) |
$80,000/$200,000 |
0.40 |
$240,000/$800,000 |
0.30 |
$320,000/$1,000,000 |
0.32 |
|
Total fixed costs = $300,000 |
First, determine the weighted average contribution margin.
Second, calculate break even point in dollars.