Estes Company Sells Two Types of Computer Chips

question 10

Multiple Choice

Estes Company sells two types of computer chips.The sales mix is 30% (Chip A) and 70% (Chip B) .Chip A has variable costs per unit of $20 and a selling price of $40.Chip B has variable costs per unit of $25 and a selling price of $55.The weighted-average unit contribution margin for Estes is

• A)$23.00.
• B)$25.00.
• C)$27.00.
• D)$50.50.

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Definitions:

Fixed Costs

Expenses that do not change as a function of the activity of a business, within the relevant period.

Break-Even Point

The level of sales at which total revenues equal total costs, resulting in no net loss or gain.

Sales Mix

The composition of a company’s product or service sales, showing the relative proportions of each product or service sold.

Net Income

The total revenue minus total expenses, indicating the profitability of a company over a specific period.