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 $2 and $3,respectively.The weighted-average contribution margin per unit would be $2.50.

Question

Quizplus · Accepted Answer

The weighted-average contribution margin per unit is calculated by taking the weighted average of the contribution margins of the two products.

In this case:

Weighted-average contribution margin = (5000 units of X * $2) + (10000 units of Y * $3) / (5000 units of X + 10000 units of Y)

= ($10,000 + $30,000) / 15000

= $2.67

Therefore, the statement that the weighted-average contribution margin per unit is $2.50 is false.

Gray Company Sells Two Products,X and Y