Use this information for Rusty Co. to answer the questions that follow.

Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows:

Unit Selling Price

Unit Variable

Unit Contribution

Product

Price

Cost

Margin

X

$110

$70

$40

Y

70

50

20

What was the unit variable cost of Rusty’s one overall enterprise product, E? Do not round interim computations.

Question

Use this information for Rusty Co. to answer the questions that follow.

​

Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows:

Unit Selling Price

Unit Variable

Unit Contribution

Product

Price

Cost

Margin

X

$110

$70

$40

Y

70

50

20

​

What was the unit variable cost of Rusty’s one overall enterprise product, E? Do not round interim computations.

BlackTom AI · Accepted Answer

In this problem, we’re asked to find the unit variable cost of the overall enterprise product E, which is formed by blending products X and Y according to the given sales mix.
First, determine the total variable costs for each product based on units sold: for X, 5,000 units × $70 per unit = $350,000; for Y, 35,000 units × $50 per unit = $1,750,000.
Next, add these to obtain the total variable cost across the enterprise: $350,000 + $1,750,000 = $2,100,000.
Also, sum the total units sold: 5,000 (X) + 35,000 (Y) = 40,000 units.
Now compute the unit variable cost of the overall product E by dividing the total variable cost by the total units: $2,100,000 ÷ 40,000 units = $52.50 per unit.
Option 1 ($52.50): This result reflects the blended, or weighted-average, variable cost per unit across both products given their sales mix.
Option 2 ($70.00): This is the per-unit variable cost for product X alone, ignoring the contribution from product Y and the mix of sales.
Option 3 ($120.00): This figure does not align with the data provided; it appears to be a miscalculation that could arise from summing price-related figures or misapplying the concept of unit costs.
Option 4 ($50.00): This is the per-unit variable cost for product Y alone, not the blended cost across both products.

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