Question

BM Company sells two products, X and Y. Product X sells for $20 per unit with variable costs of $11 per unit. Product Y sells for $30 per unit with variable costs of $16 per unit. During this period, BM sold 16,000 units of X and 4,000 units of Y, making Total Revenue of $440,000, and after subtracting variable cost got Total Contribution Margin of $200,000, and after subtracting Total Fixed Cost of $110,000, earned Operating Profit of $90,000. The weighted-average unit contribution margin is: (rounded)

Answer 1

Total Units sold = 16000+4000
=20000 units
% of X = 16000/20000
=80%
X of Y = 4000/20000
=20%
Contribution margin per unit = sales price - variable cost
Contribution margin of X = $20-11
=$9
Contribution margin of Y = 30-16
=$14
Weighted average unit contribution margin = (weight of X * contribution margin of X)+(weight of Y * contribution margin of Y)
= (0.80*9)+(0.20*14)
=$10
Correct Answer = $10
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