Pep Soda,a local convenience store,sells soft drinks.It sells two large drinks for every small drink.A large drink sells for $1.80 with a variable cost of $0.70.A small drink sells for $1.00 with a variable cost of $0.30.The weighted average contribution margin is: (Round your intermediate calculations and final answer to two decimal places.)

Question

Quizplus · Accepted Answer

To find the weighted average contribution margin, we need to calculate the contribution margin for each size of drink, weighted by their proportion of sales.

Large drink contribution margin = $1.80 - $0.70 = $1.10
Small drink contribution margin = $1.00 - $0.30 = $0.70

Since the store sells two large drinks for every small drink, the proportion of sales for large drinks is 2/3 and for small drinks is 1/3.

Weighted average contribution margin = (2/3) x $1.10 + (1/3) x $0.70 = $0.97

Therefore, the best choice is B.

Pep Soda,a Local Convenience Store,sells Soft Drinks