Answer the following questions using the information below:
The following information is for Walters Corporation:
$\begin{array}{cr}
\text { Product Q: Revenue } & \$ 10.00 \
\text { Variable Cost } & \$ 2.50\
\text { Product P: Revenue } & \$ 15.00 \
\text { Variable Cost } & \$ 5.00 \
\text { Total fixed costs } & \$ 50000
\end{array}$
-What is the operating profit,assuming actual sales total 150 000 units,and the sales mix is two units of Product Q and one unit of Product P?

Question

Answer the following questions using the information below:
The following information is for Walters Corporation:
 $\begin{array}{cr}
\text { Product Q: Revenue } & \$ 10.00 \
\text { Variable Cost } & \$ 2.50\
\text { Product P: Revenue } & \$ 15.00 \
\text { Variable Cost } & \$ 5.00 \
\text { Total fixed costs } & \$ 50000
\end{array}$
-What is the operating profit,assuming actual sales total 150 000 units,and the sales mix is two units of Product Q and one unit of Product P?

Quizplus · Accepted Answer

The contribution margin per unit for Product Q is $7.50 ($10.00 - $2.50) and for Product P is $10.00 ($15.00 - $5.00). With a sales mix of 2:1, the weighted average contribution margin per set of 3 units is $25.00 (2*$7.50 + 1*$10.00). For 150,000 total units, there are 50,000 sets of 3 units. The total contribution margin is $1,250,000 (50,000 * $25.00). Subtracting fixed costs of $50,000 gives an operating profit of $1,200,000.

Answer the Following Questions Using the Information Below: the Following

Answer the Following Questions Using the Information Below:
the Following