Coodson Company Sells Two Products, Quartz Models and Wind-Up Models

question 66

Multiple Choice

Coodson Company sells two products, Quartz models and Wind-up models. Coodson predicts that it will sell 7,200 Quartz models and 5,600 Wind-up models in the next period. The unit contribution margins for Quartz models and Wind-up models are $31 and $63, respectively. What is the weighted-average unit contribution margin?

• A) $0.02
• B) $45.00
• C) $360.00
• D) $23.14

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Definitions:

Predetermined Overhead Rate

A rate used to allocate indirect costs to products or services, based on estimated overhead costs and an allocation base.

Direct Labor-hours

The sum of time spent by employees directly involved in the creation of a product, often used to allocate manufacturing costs.

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, maintenance, and salaries of non-direct labor.

Predetermined Overhead Rate

A rate used to allocate indirect costs to products or services, calculated before the accounting period begins based on estimated costs and activity levels.