Question
In: Accounting
Answer the following questions using the information below: The following information is for Alex Corp: Product...
Answer the following questions using the information
below:
The following information is for Alex Corp:
Product X: Revenue $15.00
Variable Cost $2.50
Product Y: Revenue $25.00
Variable Cost $10.00
Total fixed costs $50,000
) The current sales mix is two units of Product X and one unit of
Product Y. If the sales mix shifts to one unit of Product X and two
units of Product Y, then the weighted-average contribution margin
will ________.
Question 26 options:
|
decrease per unit |
|
|
stay the same |
|
|
increase per unit |
|
|
decrease by $0.50 per unit |
|
|
increase by $0.50 |
Solutions
Expert Solution
0
|
Products X |
Products Y |
Total |
|
|
selling price per unit |
15 |
25 |
|
|
variable cost per unit |
- 2.5 |
- 10 |
|
|
contribution margin per unit |
12.5 |
15 |
|
|
sales mix |
2 |
1 |
3 |
| Product | 25 | 15 | 40 |
|
Weighted average contribution margin per unit |
40/3 = $13.33 |
Current Weighted average contribution margin per unit = $13.33
When sales mix shifts to one unit of Product X and two units of Product Y
|
Products X |
Products Y |
Total |
|
|
selling price per unit |
15 |
25 |
|
|
variable cost per unit |
- 2.5 |
- 10 |
|
|
contribution margin per unit |
12.5 |
15 |
|
|
sales mix |
1 |
2 |
3 |
| Product | 12.5 | 30 | 42.5 |
|
Weighted average contribution margin per unit |
42.5/3 = $14.17 |
New Weighted average contribution margin per unit = $14.17
If the sales mix shifts to one unit of Product X and two units of Product Y, then the weighted-average contribution margin will increase per unit.
Third option is correct.
ekkarill92 answered 1 year agoRelated Solutions
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