Knotley Co. sells two products. X and Y. Last year Knotley sold 14,000 units of Xs and 21.000 units of Y's. Related data are: Unit Selling Price Unit Variable Unit contribution Margin $40 Product Price $110 70 Cost %2470 50 $20 What was Knotley Co.'s overall unit variable cost? OA S58 O B. S48 OC S70 O D. S50
Knotley Co. sells two products. X and Y. Last year Knotley sold 14,000 units of Xs and 21.000 units of Y's. Related data are: Unit Selling Price Unit Variable Unit contribution Margin $40 Product Price $110 70 Cost %2470 50 $20 What was Knotley Co.'s overall unit variable cost? OA S58 O B. S48 OC S70 O D. S50
Chapter1: Financial Statements And Business Decisions
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![### Knotley Co. Product Data and Cost Analysis
Knotley Co. sells two products, X and Y. Last year, Knotley sold 14,000 units of X and 21,000 units of Y. The related data is shown in the following table:
| Product | Unit Selling Price | Unit Variable Cost | Unit Contribution Margin |
|---------|--------------------|--------------------|--------------------------|
| X | $110 | $70 | $40 |
| Y | $70 | $50 | $20 |
#### Question:
What was Knotley Co.'s overall unit variable cost?
#### Options:
A. $58
B. $48
C. $70
D. $50
### Understanding the Data:
- **Unit Selling Price**: The amount at which each unit of the product is sold.
- **Unit Variable Cost**: The cost associated with producing one unit of the product.
- **Unit Contribution Margin**: The difference between the unit selling price and the unit variable cost (Unit Selling Price - Unit Variable Cost).
### Calculating Overall Unit Variable Cost
To find the overall unit variable cost, we need to take a weighted average based on the number of units sold for each product.
The weighted average can be calculated using the formula:
\[ \text{Overall Unit Variable Cost} = \frac{( \text{Units of X} \times \text{Variable Cost of X} + \text{Units of Y} \times \text{Variable Cost of Y} )}{\text{Total Units Sold}} \]
Plugging in the values:
\[ \text{Overall Unit Variable Cost} = \frac{(14,000 \times 70) + (21,000 \times 50)}{14,000 + 21,000} \]
\[ \text{Overall Unit Variable Cost} = \frac{980,000 + 1,050,000}{35,000} \]
\[ \text{Overall Unit Variable Cost} = \frac{2,030,000}{35,000} \]
\[ \text{Overall Unit Variable Cost} ≈ 58 \]
So, the correct answer is:
**A. $58**](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe1336aa0-e91b-4a1a-a973-d70bd54c1ee9%2Fbca39303-124c-49b7-ab94-ab34fb38b711%2Fkwob5fp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Knotley Co. Product Data and Cost Analysis
Knotley Co. sells two products, X and Y. Last year, Knotley sold 14,000 units of X and 21,000 units of Y. The related data is shown in the following table:
| Product | Unit Selling Price | Unit Variable Cost | Unit Contribution Margin |
|---------|--------------------|--------------------|--------------------------|
| X | $110 | $70 | $40 |
| Y | $70 | $50 | $20 |
#### Question:
What was Knotley Co.'s overall unit variable cost?
#### Options:
A. $58
B. $48
C. $70
D. $50
### Understanding the Data:
- **Unit Selling Price**: The amount at which each unit of the product is sold.
- **Unit Variable Cost**: The cost associated with producing one unit of the product.
- **Unit Contribution Margin**: The difference between the unit selling price and the unit variable cost (Unit Selling Price - Unit Variable Cost).
### Calculating Overall Unit Variable Cost
To find the overall unit variable cost, we need to take a weighted average based on the number of units sold for each product.
The weighted average can be calculated using the formula:
\[ \text{Overall Unit Variable Cost} = \frac{( \text{Units of X} \times \text{Variable Cost of X} + \text{Units of Y} \times \text{Variable Cost of Y} )}{\text{Total Units Sold}} \]
Plugging in the values:
\[ \text{Overall Unit Variable Cost} = \frac{(14,000 \times 70) + (21,000 \times 50)}{14,000 + 21,000} \]
\[ \text{Overall Unit Variable Cost} = \frac{980,000 + 1,050,000}{35,000} \]
\[ \text{Overall Unit Variable Cost} = \frac{2,030,000}{35,000} \]
\[ \text{Overall Unit Variable Cost} ≈ 58 \]
So, the correct answer is:
**A. $58**
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