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The Winner's Circle sells two products, medals and trophies

Accounting

The Winner's Circle sells two products, medals and trophies. The Winner's Circle predicts that it will sell 25,000 medals and 5,000 trophies in the next period. The unit contribution margins for medals and trophies are $6.00 and $15.00, respectively. What is the weighted average unit contribution margin?

A) $15.00

B) $11.25

C) $7.50

D) $0.13

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Answer:  C

Explanation:  C)

 

Silver

Gold

Total

Contribution Margin

$6.00

$15.00

 

× Sales Mix

25,000

5,000

30,000

Contribution margin

$150,000

$75,000

$225,000

 

Contribution Margin $225,000 / 30,000 Sales Mix = $7.50 Weighted CM