Question

A firm sells two products, Regular and Ultra. For every unit of Regular the firm sells, two units of Ultra are sold. The firm's total fixed costs are $1,682,000. Selling prices and cost information for both products follow. The contribution margin per composite unit is:Product Unit Sales Price Variable Cost Per UnitRegular $20 $8Ultra 24 4

Answer 1

Answer:

Contribution margin per composit unit is $56

Explanation:

Composit unit are the unit of sales which is made by combining multiple products. They are sold as a package. Their costs are calculated calculated.

Product   Unit S. Price   V. Cost / unit   CM / unit   No. of unit

Regular        $20                    $8                 $16              1

Ultra             $24                    $4                   $20            2

Composit Margin per unit = ( 1 x CM per unit Regular ) + ( 2 x CM per unit Ultra )

Composit Margin per unit = ( 1 x $16 ) + ( 2 x $20 )

Composit Margin per unit = $16 + $40

Composit Margin per unit = $56