Popeye's, a local convenience store, sells soft drinks
It sells two large drinks for every small drink. A large drink sells for $3.00 with a variable cost of $0.80. A small drink sells for $1.00 with a variable cost of $0.50. The weighted average contribution margin is ________.
(Round any intermediate calculations and your final answer to the nearest cent.)
A) $1.35 per drink
B) $4.90 per drink
C) $1.63 per drink
D) $2.20 per drink
C)
Large drink Small drink
Sales price per unit $3.00 $1.00
Less variable cost per unit (0.80 ) (0.50 )
Contribution margin per unit 2.20 0.50
Number of units x 2 x 1
Weighted contribution margin $4.40 $0.50
Total weighted contribution = $4.40 + $0.50 = $4.90
Weights = 2 large drinks + 1 small drink = 3 drinks
Weighted-average contribution margin per unit = $4.90 / 3 drinks = $1.63 per drink
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