For the next year, Hall Company predicts the sale of 15,000 units of a product with a contribution margin of $6 per unit and 30,000 units of another product with a contribution margin of $9 per unit. The weighted-average contribution margin per unit is $8.

Question

Quizplus · Accepted Answer

Weighted average contribution margin per unit is calculated as follows:
[(number of units of product 1 x contribution margin per unit of product 1) + (number of units of product 2 x contribution margin per unit of product 2)] / (total number of units of both products)
= [(15,000 x $6) + (30,000 x $9)] / (15,000 + 30,000)
= $270,000 / 45,000
= $8
Therefore, the statement is true.

For the Next Year, Hall Company Predicts the Sale of 15,000