Question

Coronado Industries 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 $60 and a selling price of $135. Q-Drive Plus has variable costs per unit of $75 and a selling price of $180. The weighted-average unit contribution margin for Coronado is_________

Answer 1

weighted-average unit contribution margin = $96 per unit

Step-by-step explanation:

given data

Q-Drive = 30%

Q-Drive Plus = 70%

variable costs = $60

selling price = $135

variable costs = $75

selling price = $180

solution

we get here Contribution margin per unit that is express as

Contribution margin per unit = Selling price per unit - Variable expense per unit ....................1

so here we get for Q- drive is

Contribution margin per unit = $135 - $60 = $75

and for Q-drive plus will be

Contribution margin per unit = $180 - $75 = $105

so here weighted-average unit contribution margin will be

weighted-average unit contribution margin = Weighted sales mix × contribution margin + Weighted sales mix × contribution margin ...........2

weighted-average unit contribution margin = 30% × $75 + 70% × $105

weighted-average unit contribution margin = $22.5 + $73.5

weighted-average unit contribution margin = $96 per unit