The Purely Pizza Company sells pizzas in two different sizes-medium and large.The number of medium pizzas sold is twice the number of large pizzas sold.The contribution margin of a medium pizza is $10 and the contribution margin of a large pizza is $16.The weighted average contribution margin is $15.

Question

Quizplus · Accepted Answer

Let's assume that the Purely Pizza Company sold x large pizzas. According to the given information, they sold only half as many medium pizzas, which would be x/2.

The contribution margin for a medium pizza is $10. So, the total contribution margin from selling x/2 medium pizzas would be 10(x/2) = 5x.

Similarly, the contribution margin for a large pizza is $16. So, the total contribution margin from selling x large pizzas would be 16x.

The weighted average contribution margin is given as $15. We can express this as:

( 10(x/2) + 16x ) / (x + x/2) = 15

Simplifying this expression, we get:

(5x + 16x) / (3x/2) = 15

Multiplying both sides of the equation by 6, we get:

42x = 45x

This is not possible, as x cannot be equal to zero. Therefore, the given statement is not true, and the answer is B.

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