Question

Marigold Corp. sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $120 and a selling price of $180. Q-Drive Plus has variable costs per unit of $135 and a selling price of $225. The weighted-average unit contribution margin for Marigold is

(A) $81.
(B) $180.
(C) $69.
(D) $90.

Answer 1

(A) $81

Step-by-step explanation:

Sales mix: 30% QD and 70% QD+.

QD Variable costs per unit = $120

QD selling price = $180

QD+ Variable costs per unit = $135

QD+ selling price = $225

The unit contribution for the Q-Drive is:

`U_(QD) = 180-120 = \$ 60`

The unit contribution for the Q-Drive+ is:

`U_(QD+) = 225-130 = \$ 90`

The weighted-average unit contribution margin for Marigold is

`UC= (0.3*U_(QD))+(0.7*U_(QD+))\\UC= (0.3*60)+(0.7*90)\\UC =\$ 81`

The answer is (A) $81.