Question

Barkley Company sells two​ products, red cups and black mugs. Barkley predicts that it will sell 2 comma 100 red cups and 700 black mugs in the next period. The unit contribution margins for red cups and black mugs are $ 2.90 and $ 3.00​, respectively. What is the weighted average unit contribution​ margin? (Round the final answer to the nearest​ cent.)

Answer 1

$2.73

Step-by-step explanation:

Contribution margin:

Red = Unit Contribution margin × Sales Mix

= $ 2.90 × 2,100

= $6,090

Black = Unit Contribution margin × Sales Mix

= $ 3.00 × 700

= $2,100

Total contribution margin = Red + Black

= $6,090 + $2,100

= $8,190

Total sales mix = 2,100 + 700

= 3,000

Weighted CM:

= Total Contribution Margin ÷ Sales Mix

= $8,190 ÷ 3,000

= $2.73