Question

# Edgewater Enterprises manufactures two products. Information follows: Product A Product B Sales price \$ 14.00 \$...

Edgewater Enterprises manufactures two products. Information follows:

 Product A Product B Sales price \$ 14.00 \$ 17.15 Variable cost per unit \$ 6.30 \$ 7.70 Product mix 40% 60%

Calculate Edgewater’s weighted-average contribution margin per unit. (Round your intermediate calculations and final answer to 2 decimal places.)

#### Homework Answers

Answer #1

Edgewater’s weighted-average contribution margin per unit is \$8.75

weighted average contribution margin per unit=contribution per sales mix/number of mix

contribution per unit=sales price-variable cost per unit

for

product A

\$14-\$6.30=\$7.70

product B

\$17.15-\$7.70=\$9.45

product mix is given in a percentage of 40% for product A and 60% for product B, we can take the product mix ratio as 4:6 for the products respectively

so the contribution per sales mix=(4*\$7.70)+(6*\$9.45)=\$87.5

number of mix=4+6=10

weighted average contribution margin per unit=\$87.5/10=\$8.75

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