WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: $\begin{array} { l c c }
& \text { Smooth } & \text { Chunky } \
\text { Unit selling price } & \$ 40.00 & \$ 55.00 \
\text { Variable cost per unit } & 16.00 & 24.50
\end{array}$ Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. The weighted-average unit contribution margin is:
A)$24.00.
B)$26.60.
C)$27.90.
D)$30.50.
E)$54.50.

Question

WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: $\begin{array} { l c c } 
& \text { Smooth } & \text { Chunky } \
\text { Unit selling price } & \$ 40.00 & \$ 55.00 \
\text { Variable cost per unit } & 16.00 & 24.50
\end{array}$ Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. The weighted-average unit contribution margin is:
A)$24.00.
B)$26.60.
C)$27.90.
D)$30.50.
E)$54.50.

Quizplus · Accepted Answer

The weighted-average unit contribution margin is calculated by taking the contribution margin of each product, multiplying by their sales proportion, and summing them. Smooth: $40 - $16 = $24; Chunky: $55 - $24.50 = $30.50. Weighted average = ($24 * 0.60) + ($30.50 * 0.40) = $26.60.

WenWen Company Makes and Sells Two Types of Peanut Butter