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2 August, 08:51

Pathways Careers, Inc. has two productslong dashResume Reader and Cover Letter Cure. Financial data for both the products follow: Resume Reader Cover Letter Cure Units sold 2 comma 100 units 700 units Sales price per unit $ 500 $ 1 comma 000 Variable manufacturing cost per unit 300 650 Sales commission (% of sales) 7 % 5 % Pathways has two sales representativeslong dashCurtis Muller and Willow Brown. Each sales representative sold a total of 1 comma 400 units during the month of March. Curtis had a sales mix of 80 % Resume Reader and 20 % Cover Letter Cure. Willow had a sales mix of 60 % Resume Reader and 40 % Cover Letter Cure. Based on the above information, calculate Willow's total contribution to company profits. A. $ 138 comma 600 B. $ 364 comma 000 C. $ 168 comma 000 D. $ 306 comma 600

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  1. 2 August, 09:29
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    Option (D) is correct.

    Explanation:

    Given that,

    Willow had a sales mix of 60 % Resume Reader and 40 % Cover Letter Cure.

    Each sales representative sold = 1,400 units

    Contribution margin from the sale of Resume Reader:

    = Sales revenue - Variable manufacturing costs - Sales commission

    = (1,400 * $500 * 60%) - (1,400 * $300 * 60%) - (1,400 * $500 * 60% * 7%)

    = $420,000 - $252,000 - $29,400

    = $138,600

    Contribution margin from the sale of Cover Letter Cure:

    = Sales revenue - Variable manufacturing costs - Sales commission

    = (1,400 * $1,000 * 40%) - (1,400 * $650 * 40%) - (1,400 * $1,000 * 40% * 5%)

    = $560,000 - $364,000 - $28,000

    = $168,000

    Therefore, the total contribution to company profits is as follows:

    = Contribution margin from the sale of Resume Reader + Contribution margin from the sale of Cover Letter Cure

    = $138,600 + $168,000

    = $306,600
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