Fixed costs will total $586,400 if the mountaineering model is produced but will be only $499,200 if the touring model is produced. Alpine Thrills Ski Company is subject to a 35 percent income tax rate.

Required information

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Alpine Thrills Ski Company recently expanded its manufacturing capacity. The firm will now be able to produce up to 23,000 pairs of cross-country skis of either the mountaineering model or the touring model. The sales department assures management that it can sell between 17,000 and 21,000 units of either product this year. Because the models are very similar, the company will produce only one of the two models.

The following information was compiled by the accounting department.

Model MountaineeringTouringSelling price per unit$140.00 $128.00 Variable costs per unit 83.40  83.40

Fixed costs will total $586,400 if the mountaineering model is produced but will be only $499,200 if the touring model is produced. Alpine Thrills Ski Company is subject to a 35 percent income tax rate.

Required:

  1. Compute the contribution-margin ratio for the touring model. (Round your final answer to 2 decimal places.)

Contribution-Margin Ratio: ________________________

 

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