Question

NoFly Corporation sells three different models of a mosquito "zapper." Model A12 sells for $53 and has variable costs of $45. Model B22 sells for $101 and has variable costs of $81. Model C124 sells for $406 and has variable costs of $315. The sales mix of the three models is A12, 59%; B22, 27%; and C124, 14%. What is the weighted-average unit contribution margin? (Round answer to 2 decimal places, e.g. 15.50.) Weighted-Average Unit Contribution Margin $ ______.

Answer 1

Answer:

$22.86

Explanation:

                                                    Model A12    Model B22   Model C124

Selling price per unit                        $53                 $101            $406

Variable costs per unit                     $45                 $81              $315

Contribution margin per unit           $8                    $20             $91

Weighted-Average Unit Contribution Margin = (Model A12 Contribution margin per unit * Sales mix) + (Model B22 Contribution margin per unit * Sales mix) + (Model C124 Contribution margin per unit * Sales mix)

Weighted-Average Unit Contribution Margin = ($8 * 59%) + ($20 * 27%) + ($91 * 14%)\

Weighted-Average Unit Contribution Margin = $4.72 + $5.4 + $12.74

Weighted-Average Unit Contribution Margin = $22.86