Gray Company sells two products, X and Y. For the coming year, Gray predicts the sale of 5,000 units of X and 10,000 units of Y. The contribution margins of the two products are $5 and $3, respectively. The weighted-average contribution margin would be $5.50.

Question

Quizplus · Accepted Answer

The weighted-average contribution margin would be ((5,000 x $5) + (10,000 x $3)) / (5,000 + 10,000) = $3.67, not $5.50.

Gray Company Sells Two Products, X and Y