Smarty Pants Company sells two products, green camouflage pants and orange camouflage pants. Smarty Pants predicts that it will sell 800 pairs of green pants and 1 comma 500 pairs of orange pants in the next period. The unit contribution margins for green pants and orange pants are $ 7.25 and $ 9.00 , respectively. What is the weighted average unit contribution margin? (Round the final answer to the nearest cent.)

Question

Business

Denisse

23 March, 06:31

Smarty Pants Company sells two products, green camouflage pants and orange camouflage pants. Smarty Pants predicts that it will sell 800 pairs of green pants and 1 comma 500 pairs of orange pants in the next period. The unit contribution margins for green pants and orange pants are $ 7.25 and $ 9.00 , respectively. What is the weighted average unit contribution margin? (Round the final answer to the nearest cent.)

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Emmy Fields · Answer 1

The weighted average unit contribution margin is 7,92

Explanation:

The weighted average unit contribution margin is the sum of the contribution margin of each product multiplied by the quantity sold of that product, then divided by the sum of all the products.

CM average = (CMᵃ * Qᵃ+CMᵇ * Qᵇ) / (Qᵃ+Qᵇ)

CM average = ($ 7.25 * 800+$ 9.00 * 500) / (800+500)

CM average = ($5800+$4500) / (1300)

CM average=7,92