Q22E
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.
Step-by-Step Solution
Verified Answer
- The contribution margin by Sigma is $12,740 and Zeta is $4,410.
- Total contribution margin for the company is $17,150.
1Step 1: 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 |
2Step 2: 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 |
3Step 3: Calculation of total contribution margin for the company
Total contribution =Contribution margin by Sigma + Contribution margin by Zeta
=$12,740+$4,410
=$17,150
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