Becky's Bakery sells three large muffins for every two small ones.A small muffin sells for $3.50 with a variable cost of $2.00.A large muffin sells for $6.00 with a variable cost of $3.00.What is the weighted-average contribution margin? (Round any intermediate calculations and your final answer to the nearest cent.)
A) $4.75 per muffin
B) $2.25 per muffin
C) $4.50 per muffin
D) $2.40 per muffin

Question

Quizplus · Accepted Answer

The weighted-average contribution margin is calculated by finding the contribution margin per unit for each product, multiplying each by the proportion they represent of total sales, and then summing these amounts. For small muffins, the contribution margin is $3.50 - $2.00 = $1.50. For large muffins, it's $6.00 - $3.00 = $3.00. Since there are 3 large muffins for every 2 small ones, the proportions are 3/5 for large muffins and 2/5 for small muffins. Thus, the weighted-average contribution margin is (3/5)*$3.00 + (2/5)*$1.50 = $1.80 + $0.60 = $2.40.

Becky's Bakery Sells Three Large Muffins for Every Two Small