Question

Swifty Corporation 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 $105 and a selling price of $165. Q-Drive Plus has variable costs per unit of $120 and a selling price of $210. The weighted-average unit contribution margin for Swifty is:________

a. $165
b. $81
c. $82.5
d. $69.0

Answer 1

Answer:

b. $81

Explanation:

Calculation for theweighted-average unit contribution margin for Swifty

Using this formula

Weighted-average unit contribution margin = (Contribution per unit of Q-Drive × Weight of Q-Drive in sales mix) + (Contribution per unit of Q-Drive Plus × Weight of Q-Drive Plus in sales mix)

Let plug in the formula

Weighted-average unit contribution margin= [(Selling Price - Variable Costs) × 30%] + [( Selling Price - Variable Costs) × 70%]

Weighted-average unit contribution margin= [($165 - $105) × 30%] + [($210 - $120) × 70%]

Weighted-average unit contribution margin=($60 × 30%) + ($90 × 70%)

Weighted-average unit contribution margin= $18 + $63

Weighted-average unit contribution margin= $81

Therefore The weighted-average unit contribution margin for Swifty is $81