Question

The Doughboys Pizza Company sells pizzas in two different sizes long dash —medium and large. The two products sell in equal numbers. The contribution margin of a medium pizza is​ $16, and the contribution margin of a large pizza is​ $18. The weighted average contribution margin is​ $17.

True or False

Answer 1

True

Step-by-step explanation:

As we know

Contribution margin per unit = Selling price per unit - Variable expense per unit

The computation of the weighted average contribution margin is shown below:

= Contribution margin of a medium pizza × equal percentage + contribution margin of a large pizza × equal percentage

= $16 × 50% + $18 × 50%

= $8 + $9

= $17

So the given statement is true