Sunbucks Coffee sells three large coffees for every two small ones. A small coffee sells for $3, with a variable cost of $1.50. A large coffee sells for $5 with a variable cost of $3. What is the weighted-average contribution margin?

Question

Quizplus · Accepted Answer

The weighted-average contribution margin is calculated by finding the contribution margin for each product, multiplying by the proportion of total sales each represents, and then summing these values. For small coffee: ($3 - $1.50) * (2/5) = $0.60. For large coffee: ($5 - $3) * (3/5) = $1.20. Adding these together gives $1.80.

Sunbucks Coffee Sells Three Large Coffees for Every Two Small