Question:
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?