Following information is related to sales mix of Product A , B and C.
| Product | A (Rs) | B (Rs) | C (Rs) |
| Sales Price Per Unit | 15 | 21 | 36 |
| Variable Cost Per Unit | 9 | 14 | 19 |
| Sales Mix Percentage | 20% | 20% | 60% |
Total Fixed Cost= Rs 40,000
What is the weighted average "contribution margin" per unit for the sales mix?
Answer & explanation
Correct answer: option 4
Weighted average contribution margin per unit for the sales mix= Product A Contribution Mix(CM) per Unit*Product A Sales Mix Percentage (SMP)+ Product B CM per unit* Product B SMP+ Product C CM per unit* Product C SMP
| Product | A (Rs) | B (Rs) | C (Rs) |
| Sales Price Per Unit | 15 | 21 | 36 |
| Variable Cost Per Unit | 9 | 14 | 19 |
| Contribution Margin Per Unit | 6 | 7 | 17 |
| Sales Mix Percentage | 20% | 20% | 60% |
| 1.2 | 1.4 | 10.2 |
Weighted Average CM per Unit= 1.2+1.4+10.2=12.80