Question

A firm sells two products, Regular and Ultra. For every unit of Regular sold, two units of Ultra are sold. The firm's total fixed costs are $1,782,000. Selling prices and cost information for both products follow. The contribution margin per composite unit is:

Answer 1

Total Contribution = $52

Step-by-step explanation:

Given:

Fixed cost = $1,782,000

Product Sales price VC per unit

Regular $20 $8

Ultra $24 $4

Computation:

Contribution = Sales - VC

Contribution on regular product = 20 - 8 = $12

Contribution on ultra product = 24 - 4 = $20

Total Contribution = (1 x 12) + (2 x 20)

Total Contribution = 12 + 40

Total Contribution = $52