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MacCloud Industries has two divisions-Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: $\begin{array}{lll}&\text { Standard Division }&\text { Premium Division } & \text { Total }\\hline
\text { Sales } & \$ 400,000 & \$ 600,000&\$1,000,000 \
\text { Variable costs } & 280,000 & 360,000 \
\text { Contribution margin } & \$ 120,000 & \$ 240,000\
\text { Total fixed costs }&&&\$300,000
\end{array}$
-What is the weighted-average contribution margin ratio?
A) 34%
B) 35%
C) 36%
D) 50%

Question

Use the following information for questions 
MacCloud Industries has two divisions-Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: $\begin{array}{lll}&\text { Standard Division }&\text { Premium Division } & \text { Total }\\hline
\text { Sales } & \$ 400,000 & \$ 600,000&\$1,000,000 \
\text { Variable costs } & 280,000 & 360,000 \
\text { Contribution margin } & \$ 120,000 & \$ 240,000\
\text { Total fixed costs }&&&\$300,000
\end{array}$
-What is the weighted-average contribution margin ratio?
A) 34%
B) 35%
C) 36%
D) 50%

Quizplus · Accepted Answer

The weighted-average contribution margin ratio is calculated by dividing the total contribution margin by the total sales. The total contribution margin is $120,000 (Standard) + $240,000 (Premium) = $360,000. The total sales are $1,000,000. Thus, the weighted-average contribution margin ratio is $360,000 / $1,000,000 = 0.36, or 36%.

Use the Following Information for Questions MacCloud Industries Has

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MacCloud Industries Has