Salvador Manufacturing builds and sells snowboards, skis and poles. The sales price and variable cost for each are shown:Salvador Manufacturing dataProductSelling price per unitVariable cost per unitSnowboards$320$170Skis400225Poles5020Their sales mix is reflected in the ratio 7:3:2. Calculate the following:Contribution margin for Snowboards (based on mix) Contribution margin for Skis (based on mix) Contribution margin for Poles (based on mix) Contribution margin per composite unit

Answered: Salvador Manufacturing builds and sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Salvador Manufacturing builds and sells snowboards, skis and poles. The sales price and variable cost for each are shown:

Salvador Manufacturing data

Product	Selling price per unit	Variable cost per unit
Snowboards	$320	$170
Skis	400	225
Poles	50	20

Their sales mix is reflected in the ratio 7:3:2. Calculate the following:

Contribution margin for Snowboards (based on mix)
Contribution margin for Skis (based on mix)
Contribution margin for Poles (based on mix)
Contribution margin per composite unit

Expert Solution

Step 1

The Break-even point indicates that total units are to be sold by the business entity to recover its cost of goods sold. It can be calculated by dividing the total fixed cost by a weighted average contribution margin. The weighted average contribution margin is based on the sales mix of different products.