The Purely Pizza Company sells pizzas in two different sizes-medium and large.The two products sell in equal numbers.The contribution margin of a medium pizza is $12 and the contribution margin of a large pizza is $18.The weighted average contribution margin is $15.

Question

Quizplus · Accepted Answer

To calculate the weighted average contribution margin, we need to take into account the proportion of sales for each size. Since the two products sell in equal numbers, their proportion is 0.5 each.

The calculation for the weighted average contribution margin is:

0.5 x $12 (contribution margin of medium pizza) + 0.5 x $18 (contribution margin of large pizza) = $15

Therefore, the statement is true.

The Purely Pizza Company Sells Pizzas in Two Different Sizes-Medium