Dear Sir, How do you determine loss or profit if you are given only sales and co

  1. profile image48
    anganileposted 7 years ago

    Dear Sir,
    How do you determine loss or profit if you are given only sales and contribution...

    margin of a product mix of say 5 products?
    sales
    a, $50000    with a corresponding margin ratios of 50, 40, 20, 30, 25 %
    b, $60000
    c, $100000
    d, $30000
    e, $40000

  2. hafeezrm profile image83
    hafeezrmposted 7 years ago

    Contribution Margin is Price less Variable cost.  Total contribution margin is composed of two components: Total fixed cost plus profit. In your question sales of 5 products were given with their respective Contribution margins.  If we simply multiply each sale with its contribution margin, we get a total of $88,000 which is a mix of total fixed cost plus profit. In other words, one cannot determine loss of profit from the information given.

 
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