Mist Company sells two products, blue bowls and green cups. Mist predicts that it will sell 2,500 blue bowls and 1,500 green cups in the next period. The unit contribution margins for blue bowls and green cups are $3.60 and $4.80, respectively. What is the weighted-average unit contribution margin?

Question

Quizplus · Accepted Answer

The weighted-average unit contribution margin can be calculated as follows:

[(number of blue bowls x unit contribution margin of blue bowls) + (number of green cups x unit contribution margin of green cups)] / (total number of units)

= [(2,500 x $3.60) + (1,500 x $4.80)] / (2,500 + 1,500) 
= ($9,000 + $7,200) / 4,000 
= $16,200 / 4,000 
= $4.05

Therefore, the weighted-average unit contribution margin is $4.05.

The best choice is D.

Mist Company Sells Two Products, Blue Bowls and Green Cups