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BPP practice and revision kit - Cardio Co

Jjess2y ago
Hello sir, I am struggling with one of the questions for cardio Co; Cardio Co manufactures three types of fitness equipment: treadmills (T), cross trainers (C) and rowing machines (R). The budgeted sales prices and volumes for the next year are as follows: T C R Selling price $1,600 $1,800 $1,400 Units 420 400 380 The standard cost card for each product is shown below. T C R $ $ $ Material 430 500 360 Labour 220 240 190 Variable overheads 110 120 95 Labour costs are 60% fixed and 40% variable. General fixed overheads excluding any fixed labour costs are expected to be $55,000 for the next year. Required: (a) Calculate the weighted average contribution to sales ratio for Cardio Co. (4 marks) I put the answer as 0.6091, as I thought this is how weighted C/S ratios are usually presented but the answer was as a % I.e 60.92%. Can you please advise why it is a % and not as a decimal. Thank you in advance.
IAW3005IAW3005Tutor2y ago#1
The weighted average C/S ratio can be 0.609 or 60.9% Both are correct
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