If morton company expects to sell vcr’s at $100 a unit with variable costs of $60 per unit and dvd’s at $200 per unit with variable costs of $120 per unit, what is the weighted average contribution margin if the sales mix is 4 dvd’s for 1 vcr?

$72

Explanation:

To calculate the weighted contribution margin we can use the following formula:

[(sales price A - variable cost A) x proportional sales A] + [(sales price B - variable cost B) x proportional sales B]

= [($200 - $120) x 80%] + [($100 - $60) x 20%] = $64 + $8 = $72

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