Saldina Hardware is organized into 3 departments. The followingsales and cost data are available for the prior year.
DeptA DeptB Dept C
Sales $265,000 $850,000 $900,000
Variablecosts 106,000 510,000 720,000
ContributionMargin 159,000 340,000 180,000
Less fixedcosts 60,000 85,000 92,000
Profit 99,000 255,000 88,000
Required:
a. What is the weighted average contribution margin ratio?
b. What level of sales is needed to earn a profit of $500,000assuming the current mix?
c. Saldina Hardware places an advertisement in the local papereach week. All else equal, which department would you emphasize inthe advertisement?
