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4 November, 04:12

Madden Enterprises sells two products, Silver models and Gold models. Madden Enterprises predicts that it will sell 6 comma 3006,300 Silver models and 3 comma 9003,900 Gold models in the next period. The unit contribution margins for Silver models and Gold models are $ 95$95 and $ 190$190 , respectively. What is the weighted average unit contribution margin?

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  1. 4 November, 05:32
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    The weighted average contribution margin per unit is $131.32.

    Explanation:

    The total combined sales of both the products equal, 6300 + 3900 = 10200

    The weightage of each product in sales mix is,

    Silver = 6300 / 10200

    Gold = 3900 / 10200

    The weighted average contribution margin can be calculated by multiplying the per unit contribution of each product with their respective weights.

    Weighted average unit CM = 6300/10200 * 95 + 3900/10200 * 190

    Weighted average unit CM = $131.32
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