Question
Big Grouper Fishing Company has expanded and now also catches and sells big snappers. Big groupers still sell for $25 with variable costs per unit
Big Grouper Fishing Company has expanded and now also catches and sells big snappers. Big groupers still sell for $25 with variable costs per unit of $9. Big snappers sell for $18 with variable costs per unit of $10. Fixed costs are $4,200 for the Company. 75% of the fish sold are big groupers and 25% are big snappers. a. What is the weighted average contribution margin per unit? b. Using the weighted average contribution margin per unit, how many big groupers and big snappers does Big Grouper Fishing Company need to sell to make a $2,800 profit? c. Verify by preparing an income statement. d. Based on the income statement you just created, what is the weighted average contribution margin ratio? e. Use the weighted average contribution margin ratio to determine what amount of sales revenue is required for each type of fish to make a $2,800 profit.
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