Question

1. Contribution Margin by Segment

   The following data are for Moss Creek Apparel:

   	East	West
   Sales volume (units):
   Product XX	9,500	8,600
   Product YY	3,700	6,200
   Sales price:
   Product XX	$13	$15
   Product YY	$17	$16
   Variable cost per unit:
   Product XX	$8	$8
   Product YY	$10	$10

   a. Determine the contribution margin for Product YY.
   $

   b. Determine the contribution margin for the West Region.
   $

Answer 1

a.

	East	West
Product YY
Sales price	$17	$16
Variable cost	$10	$10
Contribution margin per unit	$7	$6
Units	3,700	6,200
Contribution margin	$25,900	$37,200

Contribution margin = $25,900 + $37,200

= $63,100

b.

	West
Product XX
Sales price	$15
Variable cost	$8
Contribution margin per unit	$7
Units	8,600
Contribution margin	$60,200

	West
Product YY
Sales price	$16
Variable cost	$10
Contribution margin per unit	$6
Units	6,200
Contribution margin	$37,200

Contribution margin = $60,200 + $37,200 = $97,400