Question

Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $6,500,000, calculate the firm's contribution margin ratio per composite unit (rounded to the nearest whole percentage). O A. 50% O B. 200% OC. 40% OD. 35% O E. 53% Reset Selection

Answer 1

Solution: Option = A. 50% Contribution margin per composite unit: Youth model at $105 x sales mix of 5 Adult model at $ 450 x sales mix of 9 Recreational model at $500 x sales mix of 6 $525 $4,050 $3,000 $7,575 Sales Price per composite unit: Youth model at $300 x sales mix of 5 Adult model at $ 850 x sales mix of 9 Recreational model at $1,000 x sales mix of 6 $1,500 $7,650 $6,000 $15,150 Contribution margin ratio = $7,575 / $15,150 = 50%