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21 April, 15:29

Sheffield Corp. sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $150 and a selling price of $210. Q-Drive Plus has variable costs per unit of $180 and a selling price of $270. The weighted-average unit contribution margin for Sheffield is : A. $69. B. $210. C. $105. D. $81.

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  1. 21 April, 15:42
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    D. $81.

    Explanation:

    We know that,

    Contribution margin per unit = Selling price per unit - Variable expense per unit

    For Q-Drive, it would be

    = $210 - $150

    = $60

    For Q-Drive Plus, it would be

    = $270 - $180

    = $90

    Now the weighted contribution margin would be

    = Q-Drive contribution margin * sales mix + Q-Drive Plus contribution margin * sales mix

    = $60 * 30% + $90 * 70%

    = $18 + $63

    = $81
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