Question: what is the contribution margin ratio for all three models combined? Blue Mountain Black Diamond Bunny Hill $ 500,000 Sales 400,000 100,000 85,000 275,000 260,000
Blue Mountain Black Diamond Bunny Hill $ 500,000 Sales 400,000 100,000 85,000 275,000 260,000 225,000 140.000 15,000 Variable Expenses Contribution Margin Fixed Expenses - Common Fixed Expenses - Unique 100,000 80,000 20,000 5,000 15,000 7,500 $ $ Net Income $ 110,000 52,500 (10,000) Fixed expenses consist of $200,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $15,000 (Bunny Hill). $7,500 (Blue Mountain), $5,000 (Black Diamond). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eliminated if a model is phased out. Sean White, an executive with the company, feels the Black Diamond line should be discontinued to increase the company's net income
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