Reynold Coffee Sells Three Large Coffees for Every Two Small

question 181

Multiple Choice

Reynold Coffee sells three large coffees for every two small ones. A small coffee sells for $4 per cup, with a variable cost of $2 per cup. A large coffee sells for $5 per cup with a variable cost of $3 per cup. What is the weighted-average contribution margin?

• A) $2.00
• B) $0.40
• C) $7.20
• D) $0.50

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard variable overhead expected, based on the actual activity level.

Variable Overhead

Indirect, fluctuating costs that change with the level of production or organizational activity.

Direct Labor-hours

The aggregate amount of time spent by staff directly participating in the production process or in service provision.

Variable Overhead Efficiency Variance

A financial metric indicating the difference between the actual variable overhead costs incurred and the expected (or standard) costs, based on the efficient use of variable inputs.