Question

Pathways​ Careers, Inc. has two productslong dashResume Reader and Cover Letter Cure. Financial data for both the products​ follow: Resume Reader Cover Letter Cure Units sold 2 comma 100 units 700 units Sales price per unit $ 500 $ 1 comma 000 Variable manufacturing cost per unit 300 650 Sales commission​ (% of​ sales) 7​% 5​% Pathways has two sales representativeslong dashCurtis Muller and Willow Brown. Each sales representative sold a total of 1 comma 400 units during the month of March. Curtis had a sales mix of 80​% Resume Reader and 20​% Cover Letter Cure. Willow had a sales mix of 60​% Resume Reader and 40​% Cover Letter Cure. Based on the above​ information, calculate​ Willow's total contribution to company profits. A. $ 138 comma 600 B. $ 364 comma 000 C. $ 168 comma 000 D. $ 306 comma 600

Answer 1

Answer:

Option (D) is correct.

Explanation:

Given that,

Willow had a sales mix of 60​% Resume Reader and 40​% Cover Letter Cure.

Each sales representative sold = 1,400 units

Contribution margin from the sale of Resume Reader:

= Sales revenue - Variable manufacturing costs - Sales commission

= (1,400 × $500 × 60%) - (1,400 × $300 × 60%) - (1,400 × $500 × 60% × 7%)

= $420,000 - $252,000 - $29,400

= $138,600

Contribution margin from the sale of Cover Letter Cure:

= Sales revenue - Variable manufacturing costs - Sales commission

= (1,400 × $1,000 × 40%) - (1,400 × $650 × 40%) - (1,400 × $1,000 × 40% × 5%)

= $560,000 - $364,000 - $28,000

= $168,000

Therefore, the total contribution to company profits is as follows:

= Contribution margin from the sale of Resume Reader + Contribution margin from the sale of Cover Letter Cure

= $138,600 + $168,000

= $306,600