Colossal Beverages Company sells two products, A and B. Mist predicts that it will sell 2 comma 500 units of A and 2 comma 000 units of B during the next period. The unit contribution margins are $ 3.50 and $ 4.80 for products A and B, respectively. What is the weightedminusaverage unit contribution margin? (Round your answer to the nearest cent.)

Question

Isabella

Business

18 May, 02:45

Colossal Beverages Company sells two products, A and B. Mist predicts that it will sell 2 comma 500 units of A and 2 comma 000 units of B during the next period. The unit contribution margins are $ 3.50 and $ 4.80 for products A and B, respectively. What is the weightedminusaverage unit contribution margin? (Round your answer to the nearest cent.)

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Answers (1)

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Kelsey Bolton · Answer 1

=$4.07 unit

Explanation:

Weighted average contribution margin is applicable where a business sells more than one product in a constant mix or proportion. It gives an idea of how much is made on the average as contribution from th sale of a unit.

It is determined as follows

Step 1

Total contribution from a mix and total units

Total contribution from a mix = (2500 * $3.50) + (2,000 * $4.80)

=$18,350

Total units in a mix = 2,500 + 2,000 = 4,500 units

Step 2

weighted average unit contribution

=$18,350/4,500units

=$4.07 unit