Coodson Company sells two products,Quartz models and Wind-up models.McDaniel predicts that it will sell 7,200 Quartz models and 5,600 Wind-up models in the next period.The unit contribution margins for Quartz models and Wind-up models are $31 and $63,respectively.What is the weighted-average unit contribution margin?

Question

Quizplus · Accepted Answer

To calculate the weighted-average unit contribution margin, we need to take the sum of the contribution margins for each product type multiplied by their respective weights, and then divide by the total number of units sold.

Weighted-average unit contribution margin = [(Unit contribution margin for Quartz models x Number of Quartz models sold) + (Unit contribution margin for Wind-up models x Number of Wind-up models sold)] / (Total number of units sold)

Plugging in the numbers, we get:

Weighted-average unit contribution margin = [(31 x 7,200) + (63 x 5,600)] / (7,200 + 5,600)
Weighted-average unit contribution margin = (223,200 + 352,800) / 12,800
Weighted-average unit contribution margin = 576,000 / 12,800
Weighted-average unit contribution margin = $45

Therefore, the best choice is B.

Coodson Company Sells Two Products,Quartz Models and Wind-Up Models