Question

I Scream For Ice Cream sells specialty ice cream in three flavors: Rocky Road, Peanut Butter, and Fruity Tooty. It sold 10,000 gallons last year. For every five gallons of ice cream sold, one pound is Fruity Tooty and the remainder is split evenly between Peanut Butter and Rocky Road. Fixed costs for I Scream For Ice Cream are $38,125 and additional information follows:

​	Rocky Road	Peanut Butter	Fruity Tooty
Sales price per pound	$8.75	$7.75	$6.50
Variable cost per pound	$5.50	$3.75	$5.75

The weighted average contribution margin per pound for the three products of I Scream For Ice Cream is

		$3.05.
		$15.25.
		$76.25.
		$0.40.

Answer 1

Weighted average unit contribution margin

= Rocky [(8.75-5.50)*2/5] + Peanut [(7.75-3.75)*2/5] + Fruity [(6.50-5.75)*1/5]

= 1.30 + 1.60 + 0.15

= 3.05

Option A is the answer