Carter Co. sells two products: Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are as follows:

Product

Unit Selling
Price

Unit Variable
Cost

Unit Contribution
Margin

Arks

$120

$80

$40

Bins

    80

  60

  20

What is carter Co.'s contribution margin of product M, if M represents an overall company product?

Question

Carter Co. sells two products: Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are as follows:

​

Product

Unit Selling
Price

Unit Variable
Cost

Unit Contribution
Margin

Arks

$120

$80

$40

Bins

80

60

20

What is carter Co.'s contribution margin of product M, if M represents an overall company product?

BlackTom AI · Accepted Answer

Overall unit contribution margin (product M) is the weighted average of each product’s unit contribution margin, weighted by the units sold of each product.

1) Relevant knowledge points and concepts
- Contribution margin per unit = Selling price per unit − Variable cost per unit.
- When combining products into a single “overall” product, compute total contribution margin (sum of each product’s unit CM × units sold) and divide by total units sold to get the overall (weighted-average) unit contribution margin.

2) Step-by-step reasoning and calculations
- Given data:
  - Arks: units = 14,000; unit CM = $120 − $80 = $40.
  - Bins: units = 56,000; unit CM = $80 − $60 = $20.
- Compute total contribution dollars by product:
  - Arks total CM = 14,000 × $40 = $560,000.
  - Bins total CM = 56,000 × $20 = $1,120,000.
- Compute combined totals:
  - Total units = 14,000 + 56,000 = 70,000 units.
  - Total CM dollars = $560,000 + $1,120,000 = $1,680,000.

3) Intermediate calculation to get overall unit CM
- Overall unit contribution margin = Total CM dollars ÷ Total units
- = $1,680,000 ÷ 70,000
- = $24 per unit.

4) Why the correct answer is correct
- The $24 value is the weighted-average contribution margin per unit across both products and correctly reflects the larger sales volume of Bins (which have a lower unit CM), pulling the average down from Arks’ $40 to $24.

5) Why the other options are incorrect
- $20 is the unit CM for Bins only, not the company-wide average.
- $60 and $92 do not correspond to the weighted-average CM; $60 might be misread from a single item’s variable cost or other miscalculation, and $92 does not match any correct weighted average of prices or costs in the data.

6) Conclusion
- The overall company product M contribution margin per unit is $24, which matches the provided correct answer.

类似问题

For the Kagaya Tea Warehouse - calculate the contribution margin for the Tea sets.

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, the contribution margin ratio is

A company's contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase?

Zipee Inc.'s unit selling price is $90, unit variable costs are $40.50, fixed costs are $170,000, and current sales are 12,000 units. How much will income from operations change if sales increase by 5,000 units?

Calculate the per-unit contribution margin of a product that has a sale price of $200 if the variable costs per unit are $65.

Calculate the per-unit contribution margin of a product that has a sale price of $400 if the variable costs per unit are $165.

A product has a sales price of $161 and a per-unit variable cost of $53. What is the contribution margin ratio? Please answer to 2 decimal places

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单