Question

Unique Company has provided the following information:

Product A: Price: $300; Unit Variable Cost: $180; Unit Contribution Margin: $120; Sales Mix: 4
Product B: $500; Unit Variable Cost: $250; Unit Contribution Margin: $250; Sales Mix: 1
Based on the given information, calculate the package contribution margin for Unique Company.
a. $400
b. $480
c. $730
d. $500

Answer 1

The package contribution margin for Unique Company is $730.

Step-by-step explanation:

To calculate the package contribution margin for Unique Company, we need to find the weighted average contribution margin of both Product A and Product B. Since the sales mix for Product A is 4 and the sales mix for Product B is 1, we can calculate the weighted average contribution margin using the following formula:

(Sales Mix of Product A * Unit Contribution Margin of Product A) + (Sales Mix of Product B * Unit Contribution Margin of Product B)

Plugging in the given values, we get:

(4 * $120) + (1 * $250) = $480 + $250 = $730

Therefore, the package contribution margin for Unique Company is $730.