Question

X Company estimates the following for its three products, A, B, and C, for 2018:

	A	B	C
Revenue	$30,744	$30,763	$47,520
Total variable costs	18,963	21,372	17,840

Fixed costs in 2018 are expected to be $18,000. What is the expected weighted average contribution margin rate in 2018?

Answer 1

	A	B	C
Revenue	$30,744	$30,763	$47,520
Less:variable costs	18,963	21,372	17,840
Contribution margin	$11,781	$9,391	$29,680
contribution margin rate (Revenue / Contribution margin)	0.38	0.31	0.62
Sales Mix	$30,744/$109,027 = 0.28	$30,763/$109,027 = 0.16	$47,520/$109,027 = 0.14
weighted average contribution margin	0.11	0.05	0.09	0.24

Total Revenue = $30,744 + $30,763 + $47,520 = $109,027

Expected weighted average contribution margin rate in 2018 = 0.24 X 100 = 24%