Question

Madden Enterprises sells two​ products, Silver models and Gold models. Madden Enterprises predicts that it will sell 6 comma 3006,300 Silver models and 3 comma 9003,900 Gold models in the next period. The unit contribution margins for Silver models and Gold models are $ 95$95 and $ 190$190​, respectively. What is the weighted average unit contribution​ margin?

Answer 1

The weighted average contribution margin per unit is $131.32.

Step-by-step explanation:

The total combined sales of both the products equal, 6300 + 3900 = 10200

The weightage of each product in sales mix is,

Silver = 6300 / 10200

Gold = 3900 / 10200

The weighted average contribution margin can be calculated by multiplying the per unit contribution of each product with their respective weights.

Weighted average unit CM = 6300/10200 * 95 + 3900/10200 * 190

Weighted average unit CM = $131.32