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kolbaska11 [484]
3 years ago
5

LO 3.4A company sells two products, Model 101 and Model 202. For every one unit of Model 101, they sell they sell two units of M

odel 202. Sales and cost information for the two products is shown. What is the contribution margin for a composite unit based on the sales mix?
$14
$21
$35
$56
Business
1 answer:
dexar [7]3 years ago
6 0

Answer:

The sales mix is 1:2.

                           Model 101          Model 102

Selling Price                       21             56

Variable Cost              -14            -35

Contribution Per Unit       7               21

Multiply Sales Mix Ratio       1               2

Weighted Contribution       7                      42

Now add the weighted Contribution to compute Contribution margin per composite unit which is 7+42=$49

Explanation:

I assumed that the cost and selling price here for Model 101 is $14 and $21 respectively. Similarly the cost and selling price of Model 102 is $35 and $56 respectively.

Remember that Contribution margin per composite unit means that we will earn 49 dollars(combined contribution of sales mix) if we sell the sale mix of Model 101 and 102 which is 1:2.

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Coast to Coast Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboa
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Answer:

Contribution margin ratio:

For East Coast = 10%

For West Coast = 8.05%

Explanation:

As per the data given in the question,

Contribution margin by sales territory report :

C C S Inc.

Contribution margin by Territory

Particulars                             East Coast                     West Coast

Sales (a)                                $8,400,000                     $8,610,000

(30,000×$280)+(0×$130)

(21,000×$280)+(21,000×$130)

Less: variable cost of goods sold(b) $6,600,000      $6,657,000

(30,000×$220)+(0×$97)

(21,000×$220)+(21,000×$97)

Manufacturing margin (c=a-b) $1,800,000                  $1,953,000

Less: Variable selling expense (d) $960,000             $1,260,000

(30,000×$32)+(0×$28)

(21,000×$32)+(21,000×$28)

Contribution margin (e=c-d)        $840,000                 $693,000

For East Coast:

Contribution margin ratio = (Contribution margin ÷ Sales revenue)×100

=($840,000÷ $8,400,000)×100

= 10%

For west coast:

Contribution margin ratio = (Contribution margin ÷ Sales revenue)×100

=($693,000 ÷ $8,610,000)×100

= 8.05%

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