 Business
19 May, 16:41

# Assume MIX Inc. has sales volume of \$1,126,000 for two products with May sales and contribution margin ratios as follows: Product A: Sales \$442,000; Contribution Margin Ratio 30% Product B: Sales \$684,000; Contribution Margin Ratio 60% Required: Assume MIX's fixed expenses are \$314,000. Calculate the May total contribution margin, operating income, average contribution margin ratio, and breakeven sales volume.

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1. 19 May, 17:54
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(1) \$543,000

(2) \$229,000

(3) 0.4822 or 48.22%

(4) 651,182

Explanation:

May total contribution margin:

= Product A contribution margin + Product B contribution margin

= (\$442,000 * 30%) + (\$684,000 * 60%)

= \$132,600 + \$410,400

= \$543,000

Operating income = Total contribution margin - Fixed cost

= \$543,000 - \$314,000

= \$229,000

Average contribution margin ratio = Total contribution margin : Total sales

= \$543,000 : \$1,126,000

= 0.4822 or 48.22%

Break-even sales volume = Fixed cost : Average contribution margin ratio

= \$314,000 : 0.4822

= 651,182