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Andru [333]
3 years ago
12

Isabellas, Inc., a local convenience store, sells soft drinks. It sells two large drinks for every small drink. A large drink se

lls for $3.00 with a variable cost of $0.80. A small drink sells for $1.00 with a variable cost of $0.50. The weighted average contribution margin is intermediate calculations and your final answer to the nearest cent.) (Round any Select one: O A. $1.35 per drink B. $4.90 per drink C. $2.20 per drink D. $1.63 per drink
Business
1 answer:
Ghella [55]3 years ago
4 0

Answer:

Option (D) is correct.

Explanation:

Large drink:

Contribution margin per unit = Selling price - Variable cost

                                                = $3.00 - $0.80

                                                = $2.20

Small drink:

Contribution margin per unit = Selling price - Variable cost

                                                = $1.00 - $0.50

                                                = $0.50

Sales mix ratio 2:1  

(2/3 × 100 = 66.67% for large drink

and 1/3 × 100 = 33.33% for small drink

Weighted contribution margin:

= Contribution margin per unit × sales mix percentage

= ($2.20 × 66.67%) + ($0.50 × 33.33%)

= $1.47 + 0.17

= $1.63 or $1.64 (approx)

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Current break even units = $17,125

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Explanation:

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<u>Solution and Explanation:</u>

The data of SAG of special order is given below:

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<u>Calculated the total cost of the special order as follows: </u>

Incremental cost per unit = Cost per unit-Allocated fix cost  =$(3.50 minus 1.50)  =$2

Incremental cost per unit=cost per unit-allocated fix cost  =$(3.50 minus1.50) =$2

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b) Offering price by ETU = $35000. Hence, the offer made by ETU would affect the short term of the special order.

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Answer:

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