Question

Slamburger's sells three cheeseburgers for every three regular hamburgers. A cheeseburger sells for $4.75 with a variable cost of $2.00. A regular hamburger sells for $4.25 with a variable cost of $1.75. What is the weighted average contribution margin

Answer 1

Answer:

$2.63

Explanation:

The computation of the weighted average contribution margin is shown below:-

Contribution margin = Selling price - Variable costs

For cheeseburger

= $4.75 - $2.00

= $2.75

For regular hamburger

= $4.25 - $1.75

= $2.5

Weighted average Contribution margin = Respective Contribution margin × Respective mix

= ($2.75 × 3) ÷ 6 + ($2.5 × 3) ÷ 6

= $1.38 + $1.25

= $2.63