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?

Question

Business

Olivia Mccullough

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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Answers (1)

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Leanna Leon · Answer 1

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