Reference no: EM132511034

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

                           Dept A                 Dept B                   Dept C

Sales                     $265,000           $850,000               $900,000

Variable costs             106,000            510,000                720,000

Contribution Margin         159,000          340,000                180,000

Less fixed costs             60,000               85,000                92,000

Profit                           99,000                255,000                   88,000

Required:

Question a. What is the weighted average contribution margin ratio?

Question b. What level of sales is needed to earn a profit of $500,000 assuming the current mix?

Question c. Saldina Hardware places an advertisement in the local paper each week. All else equal, which department would you emphasize in the advertisement?