A Product Sells for $5, and Has Unit Variable Costs

question 5

Multiple Choice

A product sells for $5, and has unit variable costs of $3. This product accounts for $20,000 in annual sales, out of the firm's total of $60,000. When performing multiproduct break-even analysis, the weighted contribution of this product is approximately

• A) 0.133
• B) 0.200
• C) 0.40
• D) 0.667
• E) $1.667

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Definitions:

Expand

To express a mathematical expression in an extended form by removing parentheses or factoring, usually by applying the distributive property.

Binomial Theorem

A formula for expressing the powers of sums, which identifies the expansion of a binomial raised to any positive integer power.

Approximate

To estimate or come close to an actual value, not exact but within a reasonable range.

Binomial Coefficient

A numerical factor that represents the number of ways to choose a subset of elements from a larger set, commonly expressed as "n choose k."