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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