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Blue Chance Co. sells computers and video game systems. The business is divided into two divisions along product lines. Variable costing income statements for the

Blue Chance Co. sells computers and video game systems. The business is divided into two divisions along product lines. Variable costing income statements for the current year are presented below:

Computers VG Systems Total

Sales $700,000 $300,000 $1,000,000

Variable costs 420,000 210,000 630,000

Contribution margin $280,000 $ 90,000 370,000

Fixed costs 296,000

Net income $ 74,000

Instructions

(a) Determine the sales mix and contribution margin ratio for each division.

(b) Calculate the companys weighted-average contribution margin ratio.

(c) Calculate the companys break-even point in dollars.

(d) Determine the sales level, in dollars, for each division at the break-even point.

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