Question
Asked Nov 2, 2019
If Morton Company expects to sell VCR's at $100 a unit with variable costs of $60 per unit and
DVD's at $200 per unit with variable costs of $120 per unit, what is the weighted average
margin if the sales mix is 4 DVD's for 1 VCR?
contribution
O $160
$72
$120
$36
Chp
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If Morton Company expects to sell VCR's at $100 a unit with variable costs of $60 per unit and DVD's at $200 per unit with variable costs of $120 per unit, what is the weighted average margin if the sales mix is 4 DVD's for 1 VCR? contribution O $160 $72 $120 $36 Chp

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Expert Answer

Step 1

Formula to compute the weighted contribution margin:

(Relative sales mix x
Weighted average
contribution margin
contribution margin per unit
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(Relative sales mix x Weighted average contribution margin contribution margin per unit

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Step 2

Compute the weighted average contrib...

Weighted average
4
($200-$120)x
5
($100 $60)x
5
contribution margin
= $64 + $8
=$72
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Weighted average 4 ($200-$120)x 5 ($100 $60)x 5 contribution margin = $64 + $8 =$72

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