Question

Rory’s company sells laptop computers for $700 and high-end desktop computers for $1,800. The variable costs for the laptops total $300, while the variable costs for the desktops total $700. Rory has recently found out that the sales mix percentage for the desktops is 30%, and the laptops make up the other 70%. What is the weighted-average unit contribution margin for these two products?

Answer 1

Answer:

The weighted-average unit contribution margin is $610

Explanation:

Hi, first we need to find the contribution margin for each line of product. This is as follows.

Laptops

$Price-Var.Cost= Contrib.Margin$

$700-300=400$

Desktops

$1,800-700=1,100$

Now, the weighted-average unit contribution margin is as follows.

$Contrib.Margin(Laptops)*Percent(Laptops)+Contrib.Margin(DeskT)*Percent(DeskT)$

$1,100*0.3+400*0.7=610$

So, the weighted-average unit contribution margin for this company is $610

Best of luck