Use the Following Information for Items

question 27

Multiple Choice

Use the following information for items
Ed Green Corporation has two divisions; Outdoor Sports and Indoor Sports.The sales mix is 60% for Outdoor Sports and 40% for Indoor Sports.Green incurs $2,420,000 in fixed costs.The contribution margin ratio for the Outdoor Sports Division is 40%, while for the Indoor Sports Division it is 50%.
-What will be the total contribution margin at the break-even point?

• A)$ 960,000
• B)$1,600,000
• C)$2,420,000
• D)$4,960,000

---

Definitions:

Variable Costs

Expenses that change in proportion to the production or sales figures, like direct labor and raw materials.

Break-Even Point

The level of activity or sales volume at which total revenues equal total costs, resulting in no net loss or gain.

Automated Equipment

Machinery and tools that operate with minimal human intervention, often used to enhance efficiency in manufacturing or production processes.

Contribution Margin Ratio

A financial ratio that shows how much of a company's sales revenue is available to cover its fixed costs and contribute to net profit, calculated as contribution margin divided by sales revenue.