Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3.                 saldina hardware is

                Saldina Hardware is organized into 3 departments. The following sales and cost data are available for...

Free

70.2K

Verified Solution

Question

Accounting

               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?

Answer & Explanation Solved by verified expert
3.8 Ratings (655 Votes)

Dept A Dept B Dept C Total
Sales        265,000        850,000        900,000 2,015,000
Variable costs        106,000        510,000        720,000 1,336,000
Contribution Margin        159,000        340,000        180,000      679,000
Less: Fixed costs           60,000           85,000           92,000      237,000
Profit           99,000        255,000           88,000      442,000
Contribution Margin Ratio 60.00% 40.00% 20.00% 33.70%
Weighted average contribution Margin ratio = Total Contribution Margin/Total Sales
=679000/2015000
33.70%
b.Level of Sales Required = (Desired Profit + Total Fixed costs)/Weighted average Contribution Margin Ratio
=(500,000+237,000)/33.70%
              2,186,943.62
c.Department with highest Contribution Margin Ratio should be emphasised as it will lead to maximum profit
i.e. Departement A

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

For the following questions, use the research question and context to determine the type of test...

Statistics
Q

You may need to use the appropriate appendix table to answer this question. According to Money magazine,...

Statistics
Q

Solve y’’ – 11y’ + 24y = ex +3x using reduction of order

Advance Math
Q

Take the exchange rates of two different nations at two different time intervals and determine the...

Accounting
Q

The actively dividing group of cells that are genetically pre determined to carry and distribute...

Biology
Q

32 According to Figure 1 and Figure 2 which of the fol lowing best describes...

Biology
Q

The hotness of chili peppers is usually measured in Scoville units. Using a log scale...

Basic Math
Q

(a) replastering and repainting a wall which had been damaged due...

Accounting
Q

What are Tax Practice Responsibilities ?

Accounting
Q

Current Attempt in Progress Pharoah's Market recorded the following events involving a recent purchase of...

Accounting
Q

Calculate the total cost for job number 51 from the following: Direct material cost $138,...

Accounting
Q

Match each of the following stockholders' equity concepts to the most appropriate term (a-g). ...

Accounting