Product A is normally sold for $9.60 per unit. A special price of $7.20 is offered for the export market. The variable productio
n cost is $5.00 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order. a. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. Round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.
1 answer:
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Answer:
60 percent
Explanation:
Contribution margin refers to the revenue a firm derives after deducting the variable cost it has incurred.
Contribution margin = Sales - Variable costs
Contribution margin or contribution to sales ratio represents the percentage of contribution a firm earns from the sale of it's output.
It is represented mathematically as,
=
Also, contribution margin ratio = 100 - variable cost ratio percentage.
Hence, contribution margin for three departments would be:
A = 100 - 30% = 70%
B = 100 - 40% = 60%
C = 100- 50% = 50%
This represents if sales revenue is 100, contribution margin earned is 70, 60 and 50 under three cases.
Since sales revenue in all three departments is the same, let us assume the sales revenue of a department as y.
Thus, weighted average contribution margin would be, 60 percent