NoFly Corporation sells three different models of a mosquito “zapper.” Model A12

Question

NoFly Corporation sells three different models of a mosquito “zapper.” Model A12 sells for $54 and has variable costs of $43. Model B22 sells for $106 and has variable costs of $76. Model C124 sells for $406 and has variable costs of $311. The sales mix of the three models is A12, 56%; B22, 27%; and C124, 17%.

What is the weighted-average unit contribution margin? (Round answer to 2 decimal places, e.g. 15.50.)

Weighted-Average Unit Contribution Margin $ __________________

NoFly Corporation sells three different models of a mosquito "zapper" Model A12 sells for $54 and has variable costs of $43. Model B22 sells for $106 and has variable costs of $76. Model C124 sells for $406 and has variable costs of $311. The sales mix of the three models is A12, 56%; B22, 27%; and C124, 17% What is the weighted-average unit contribution margin? (Round answer to 2 decimal places, e.g. 15.50.) Weighted-Average Unit Contribution Margin

Explanation / Answer

Contribution margin per unit = Selling price per unitr - variable cost per unit

Weighted average unit contribution margin = (Model A12 Contribution margin * sales mix) + (Model B22 Contribution margin * sales mix) + (Model C124 Contribution margin * sales mix)

= (11*56%) + (30*27%) + (95*17%)

= 6.16 + 8.1 + 16.15

= 30.41

Contribution margin Model A12 11 (54-43) Model B22 30 (106-76) Model C124 95 (406-311)

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