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24 January, 11:23

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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  1. 24 January, 12:14
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    =$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
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