Final answer:
To calculate the total contribution margin, you need to find the unit contribution margin for each product and multiply it by the total number of units sold. The unit contribution margin is calculated by subtracting the variable costs from the selling price per unit. Then, you add together the contribution margins of both products to find the total contribution margin.
Step-by-step explanation:
The total contribution margin that Cane Company will earn can be calculated by multiplying the unit contribution margin by the total number of units sold. To calculate the unit contribution margin, we subtract the variable costs per unit from the selling price per unit. Assuming that the selling price of alpha is $25/unit and the selling price of beta is $25/unit, and the variable costs for each unit of alpha and beta are $x and $y respectively, we can use the following equations:
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- Total units of alpha sold = 86,000 units
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- Total units of beta sold = 66,000 units
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- Unit contribution margin for alpha = $25 - $x
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- Unit contribution margin for beta = $25 - $y
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- Total contribution margin = (Total units of alpha sold × Unit contribution margin for alpha) + (Total units of beta sold × Unit contribution margin for beta)