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Unique Company has provided the following information:

Product Price Unit Variable Cost Unit Contribution Margin Sales Mix Product A$300 $180 $120
Product B$500 $250 $250
Based on the given information, calculate the package contribution margin for Unique Company.
a.$400
b.$730
c.$500
d.$480

User Hkf
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1 Answer

5 votes

Final answer:

The package contribution margin for Unique Company would be $370 assuming an equal sales mix of Product A and B. This calculation is based on summing the individual contribution margins of each product.

Step-by-step explanation:

To calculate the package contribution margin for Unique Company, we must consider the sales mix of products A and B which is not provided in the question. Assuming the sales mix is equal (1:1) since there is no other information given, we can find the combined unit contribution margin of one package (one unit of Product A and one unit of Product B).

First, calculate the total contribution margin for Product A and Product B:

  • Product A Contribution Margin = Price of A - Variable Cost of A = $300 - $180 = $120
  • Product B Contribution Margin = Price of B - Variable Cost of B = $500 - $250 = $250

Then, combine the contribution margins:

  • Total Package Contribution Margin = Product A Contribution Margin + Product B Contribution Margin = $120 + $250 = $370

Since the sales mix is not given, we must make an assumption. If the sales mix ratio is different, the calculation would also change based on that ratio.

User Tajuana
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