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15 June, 00:59

A product sells for $5, and has unit variable costs of $3. This product accounts for $20,000 in annual sales, out of the firm's total of $60,000. When performing multiproduct break-even analysis, what is the weighted contribution of this product?

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  1. 15 June, 01:15
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    0.1333

    Explanation:

    Given that,

    Selling price = $5

    Variable cost = $3

    Annual sales = $20,000

    Total sales = $60,000

    Contribution margin:

    = Selling price - Variable cost

    = $5 - $3

    = $2

    Number of units sold:

    = Annual sales : Selling price

    = $20,000 : $5

    = 4,000 units

    Total contribution sales:

    = Number of units sold * Contribution margin per unit

    = 4,000 units * $2

    = $8,000

    Weighted contribution:

    = Total contribution sales : Total sales

    = $8,000 : $60,000

    = 0.1333
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