Pep Soda, a local convenience store, sells soft drinks. It sells two large drinks for every small drink. A large drink sells for $1.50 with a variable cost of $0.60. A small drink sells for $1.00 with a variable cost of $0.50. The weighted average contribution margin is: (Round your intermediate calculations and final answer to two decimal places)

Question

Quizplus · Accepted Answer

The weighted average contribution margin is calculated by considering the sales mix and the contribution margin of each product. For large drinks: Contribution Margin = $1.50 - $0.60 = $0.90. For small drinks: Contribution Margin = $1.00 - $0.50 = $0.50. The sales mix is 2 large drinks for every 1 small drink, so the weighted average contribution margin = (2/3 * $0.90) + (1/3 * $0.50) = $0.77 per drink.

Pep Soda, a Local Convenience Store, Sells Soft Drinks