655,256 210,618 865,874 $163,814 $140,412 101,946 $202,280 Sales Mix Percentage

Question

655,256

210,618

865,874

$163,814

$140,412

101,946

$202,280

Sales Mix Percentage

Contribution margin ratio

    

    $

Question 3 Rapid Auto has over 200 auto-maintenance service outlets nationwide. It provides primarily two lines of service: oil changes and brake repair. Oil change-related services represent 60% of its sales and provide a contribution margin ratio of 10%. Brake repair represents 40% of its sales and provides a 50% contribution margin ratio. The company's fixed costs are $10,452,000 (that is, $52,260 per service outlet).

Explanation / Answer

Calculate the company's weighted-average contribution margin ratio. (Round answers to 3 decimal places, e.g. 2.250.)

=0.70*0.20 + 0.29*0.39 = 0.2531or 25.31%

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