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22 November, 14:52

Vaughn Manufacturing has two divisions; Sporting Goods and Sports Gear. The sales mix is 75% for Sporting Goods and 25% for Sports Gear. Vaughn incurs $6890000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. The weighted-average contribution margin ratio is 70%. 35%. 40%. 45%.

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  1. 22 November, 18:45
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    The correct answer is 35%.

    Explanation:

    According to the scenario, the computation of the given data are as follows:

    We can calculate the Weighted average contribution margin ratio by using following formula:

    weighted-average contribution margin ratio = (Contribution margin ratio * Sales of sporting goods) + (Contribution margin ratio * Sales of sporting gears)

    = (30 * 75%) + (50 * 25%)

    = 22.5% + 12.5%

    = 35%
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