A product sells for $5, and has unit variable costs of $3. This product accounts for $20,000 in annual sales, out of the firm's total of $60,000. When performing multiproduct break-even analysis, what is the weighted contribution of this product?

0.1333

Explanation:

Given that,

Selling price = $5

Variable cost = $3

Annual sales = $20,000

Total sales = $60,000

Contribution margin:

= Selling price - Variable cost

= $5 - $3

= $2

Number of units sold:

= Annual sales : Selling price

= $20,000 : $5

= 4,000 units

Total contribution sales:

= Number of units sold * Contribution margin per unit

= 4,000 units * $2

= $8,000

Weighted contribution:

= Total contribution sales : Total sales

= $8,000 : $60,000

= 0.1333