Answer the following statements true (T) or false (F)
1. For the next year, Sullivan & Co. predicts sales of 15,000 units of a product with a contribution margin
of $6 per unit and 30,000 units of another product with a contribution margin of $10 per unit. The
weighted-average contribution margin per unit is $8.67.
2. A company that sells multiple products will always set sales prices such that all products have the
same contribution margin.
3. The Doughboys Pizza Company sells pizzas in two different sizes—medium and large. The two
products sell in equal numbers. The contribution margin of a medium pizza is $16, and the contribution
margin of a large pizza is $18. The weighted average contribution margin is $17.
4. The Buttercrust Pizza Company sells pizzas in two different sizes—medium and large. The number of
medium pizzas sold is twice the number of large pizzas sold. The contribution margin of a medium pizza
is $10, and the contribution margin of a large pizza is $22. The weighted average contribution margin is
$16.00.
1. TRUE
Total contribution = ($6 × 15,000) + ($10 × 30,000) = $90,000 + $300,000 = $390,000
Weighted-average contribution margin per unit = $390,000 / 45,000 = $8.67
2. FALSE
3. TRUE
Total contribution = $16 + $18 = $34
Weighted-average contribution margin per unit = $34 / 2 = $17
4. FALSE
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