If the sales mix shifts to one unit of Product Q and two units of Product P,then the weighted-average contribution margin will:

Question

Quizplus · Accepted Answer

If the sales mix shifts to one unit of Product Q and two units of Product P, it means the proportion of the sales of Product P increases. Hypothetically, let's say the contribution margin of Product Q is $10 per unit and the contribution margin of Product P is $5 per unit. 
In the previous sales mix, the weighted-average contribution margin would be ((2 x $10) + (1 x $5))/3 = $8.33. 
If the sales mix shifts to one unit of Product Q and two units of Product P, the new weighted-average contribution margin would be (($10) + (2 x $5))/3 = $6.67.
Therefore, the weighted-average contribution margin will decrease per unit.

If the Sales Mix Shifts to One Unit of Product