Question

Analyzing profitability Sampler Company sells two products, Sigma and Zeta, with a sales mix of 70% and 30%, respectively. Sigma has a contribution margin per unit of \(26, and Zeta has a contribution margin per unit of \)21. The company sold 700 total units in September. Calculate the total amount each product contributed to the coverage of fixed costs and the total contribution margin for the company.

Short answer

• The contribution margin by Sigma is $12,740 and Zeta is $4,410.
• Total contribution margin for the company is $17,150.

Step-by-step solution

Calculation of number of units of each product sold:

Particulars	Sigma	Zeta
Total number of units	700	700
Sales mix	70%	30%
Number of units	490	210

Calculation of the total amount each product contributed to the coverage of fixed costs

Particulars	Sigma	Zeta
Number of units	490	210
Contribution margin per unit	$26	$21
Contribution Margin	$12,740	$4,410

Calculation of total contribution margin for the company

Total contribution =Contribution margin by Sigma + Contribution margin by Zeta

=$12,740+$4,410

=$17,150