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28 February, 04:43

Colossal Beverages Company sells two products, A and B. Mist predicts that it will sell 2,500 units of A and 2,000 units of B during the next period. The unit contribution margins are $4.00 and $4.80 for products A and B, respectively. What is the weighted-average unit contribution margin? (Round your answer to the nearest cent.)

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  1. 28 February, 05:05
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    The correct answer is $4.36.

    Explanation:

    According to the scenario, the given data are as follows:

    Product A = 2,500 units

    Products B = 2,000 units

    Contribution margin of A = $4

    Contribution margin of B = $4.80

    So, we can calculate the weighted-average unit contribution margin by using following formula:

    Weighted-average unit contribution = (Total contribution Of product A + Total contribution of product B) : Total number of units sold

    Where, Total contribution Of product A = 2,500 units * $4 = $10,000

    And Total contribution of product B = 2,000 units * $4.8 = $9,600

    By putting the value, we get

    Weighted-average unit contribution = ($10,000 + $9,600) : 2,500 + 2,000

    = $19,600 : 4,500

    = $4.36
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