Mist Company sells two products-A and B.Mist predicts that it will sell 5500 units of A and 2000 units of B during the next period.The unit contribution margins are $3.75 and $5.00,respectively.What is the weighted-average unit contribution margin?

Question

Quizplus · Accepted Answer

To find the weighted-average unit contribution margin, we need to calculate the total contribution margin for each product and then divide by the total number of units sold:

Total contribution margin for A = 5500 units x $3.75 = $20,625
Total contribution margin for B = 2000 units x $5.00 = $10,000
Total contribution margin for both products = $20,625 + $10,000 = $30,625

Total units sold = 5500 units + 2000 units = 7500 units

Weighted-average unit contribution margin = Total contribution margin for both products / Total units sold
= $30,625 / 7500 units
= $4.08 per product

Mist Company Sells Two Products-A and B