Geneva Bottled Water Co.is assembling a weighted average contribution margin chart to better analyze differences between sales on 36 oz.and the 20 oz.bottled water.The sales price per unit of the 36 oz.bottled water is $3.79 while the sales price per unit of the 20 oz.bottled water is $1.19.The contribution margin per unit for the 36 oz.bottle is $1.35 and the contribution margin of the 20 oz.bottle is $0.28.The 20 oz.bottle outsells the 36 oz.bottle by a 5:1 relationship.
What is the weighted average contribution margin per unit on these two products?

Question

Quizplus · Accepted Answer

C)
Contribution margin per unit of the 36 oz.bottle =$1.35 × 1 = contribution margin of the 36 oz.bottle = $1.35
Contribution margin per unit of the 20 oz.bottle = $0.28 × 5 = Contribution margin of the 20 oz.bottle = $1.40.
Total contribution margin =$2.75 ÷ Total sales mix = 6 = Weighted-average contribution margin per unit = $0.458~$0.46