Exhibit 6-3
Howard Company sells mountain bikes for $1,400 per unit representing 40 percent of total sales,and cruising bikes for $1,000 per unit representing 60 percent of total sales.Variable cost per unit is $600 for mountain bikes and $500 for cruising bikes.
-Refer to Exhibit 6-3.What is the weighted average contribution margin per unit?

Question

Quizplus · Accepted Answer

The weighted average contribution margin per unit is calculated by taking the contribution margin of each product, multiplying it by its sales proportion, and summing the results. For mountain bikes: ($1,400 - $600) * 0.40 = $320. For cruising bikes: ($1,000 - $500) * 0.60 = $300. Adding these gives $320 + $300 = $620.

Exhibit 6-3 Howard Company Sells Mountain Bikes for $1,400 Per Unit Representing