Coodson Company sells two products, Quartz models and Wind-up models. Coodson 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

The weighted-average unit contribution margin can be calculated using the following formula:

[(number of units of product A sold * contribution margin per unit of product A) + (number of units of product B sold * contribution margin per unit of product B)] / (total number of units sold)

Plugging in the given values, we get:

[(7200 * 31) + (5600 * 63)] / (7200 + 5600) = $45.00

Therefore, the best choice is B, with a weighted-average unit contribution margin of $45.00.

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