Question

12)

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

	A	B	C
Revenue	$65,125	$25,346	$33,156
Total variable costs	40,438	20,367	16,632

Fixed costs in 2018 are expected to be $19,200. What is the expected weighted average contribution margin rate in 2018?

Answer 1

Contribution Margin for Product A = Total sales Revenue - variable cost

=$65125 - $40438

= $24687

Contribution Margin Rate for Product A = (Contribution Margin For Product A / Total Sales Revenue ) × 100

= $24687/$123627×100

= $19.96

Contribution Margin For Product B = Total Sales Revenue - Total Variable Cost

= $25346 - $20367

= $4979

Contribution Margin Rate for Product B =( Contribution Margon for Product B / Total Sales Revenue) ×100

= $4979/$123627×100

= $4.02

Contribution Margin for Product C = Total Sales Revenue - Total Variable Cost

= $33156 - $16632

= $16524

Contribution Margin Rate for Product C = (Contribution Margin for product C / total sales Revenue ) × 100

=$16524 / $123627 × 100

= $13.14

Total Contribution Margin = $24687 + $4979 + $16524

= $46190