Genesis Corporation sells three types of snowboards with the following information: What is the weighted-average contribution margin for Genesis Corporation?
A) $42
B) $46
C) $56
D) $62

Question

Genesis Corporation sells three types of snowboards with the following information:  What is the weighted-average contribution margin for Genesis Corporation?
A) $42 
B) $46 
C) $56 
D) $62

Quizplus · Accepted Answer

Before computing the weighted-average contribution margin, the unit contribution margin for each snowboard must be computed. Beginner, ($40 - $10) is $30, Novice ($50 - $15) is $35, and Expert ($$80 - $20) is $60. The weighted-average contribution margin (WACM) is then calculated as: (CM x Sales mix for Beginner) + (CM x Sales mix for Novice) + (CM x Sales mix for Expert), thus ($30 × .50) + ($35 × .20) + ($60 × .40) or ($15.00 + $7.00 + $24.00) = $46.00.

Genesis Corporation Sells Three Types of Snowboards with the Following