Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

: Analyzing profitability Refer to Exercise E21-22. Assume the sales mix shifted to 50% for each product. Calculate the total amount each product contributed to the coverage of fixed costs and the total contribution margin for the company.

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

Expert verified
  • The contribution margin by Sigma is $9,100 and Zeta is $7,350.
  • Total contribution margin for the company is $16,450.

Step by step solution

01

Calculation of number of units of Sigma and Zeta:

As the sales mix contain both products 50-50 % means the number of units of each product is equal.

Number of Units = Total units x Sales Mix

=700 x 50%

=350.

02

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

Particulars

Sigma

Zeta

Number of units

350

350

Contribution margin per unit

$26

$21

Contribution Margin

$9,100

$7,350

03

 Step 3: Calculation of total contribution margin for the company

Step 3: Calculation of total contribution margin for the company

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Study anywhere. Anytime. Across all devices.

Sign-up for free