McDaniel Company sells two products-J and B. McDaniel predicts that it will sell 7,200 units of J and 5,600 units of B in the next period. The unit contribution margins are $2.85 and $6.30, respectively. What is the weighted-average unit contribution margin?

Question

Quizplus · Accepted Answer

The weighted-average unit contribution margin is calculated by multiplying each product's contribution margin by its proportion of total sales, then summing these amounts. For McDaniel Company: [(7,200 units * $2.85) + (5,600 units * $6.30)] / (7,200 + 5,600) = $4.36 per product.

McDaniel Company Sells Two Products-J and B