Sally's Fries sells four large fries for every three small ones. A small fry sells for...
Sally's Fries sells four large fries for every three small ones. A small fry sells for $2 with a variable cost of $0.75. A large fry sells for $6 with a variable cost of $1.50 What is the weighted average contribution margin?
|
$9.67 |
||
|
$5.46 |
||
|
$3.78 |
||
|
$3.11 |
Homework Answers
The correct answer is $ 3.11
Contribution Margin for small fry = Selling Price - Variable Cost
= $ 2 - $ 0.75
= $ 1.25
Contribution Margin for large fry = Selling Price - Variable Cost
= $ 6 - $ 1.50
= $ 4.50
| Small Fry | Large Fry | Total | |
| Contribution Margin per unti | 1.25 | 4.5 | |
| Sales Mix | 3 | 4 | 7.00 |
| Contribution Margin ( Contribution Margin per unit* sales mix) | 3.75 | 18 | 21.75 |
| Weighted average contribution margin (Contribution Margin Total / Sales Mix total) | 3.11 |
Weighted average contribution margin = $ 3.11
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