How to calculate weighted average contribution margin?
Understand the Problem
The question is asking for the method or formula used to calculate the weighted average contribution margin, which typically involves determining the contribution margin of various products and weighing them based on their sales volume or revenue.
Answer
Sum the products of contribution margins and unit sales, then divide by total unit sales.
The final answer is obtained by summing the products of contribution margins and their respective unit sales, then dividing by the total unit sales.
Answer for screen readers
The final answer is obtained by summing the products of contribution margins and their respective unit sales, then dividing by the total unit sales.
More Information
The weighted average contribution margin helps in understanding which products contribute most to covering fixed costs and generating profit.
Tips
A common mistake is forgetting to include all product lines in the calculations, which can skew the weighted average.
Sources
- Weighted-Average Contribution Margin Example - YouTube - youtube.com
- The web page with info on - Example Source - smallbusiness.chron.com
- Weighted Ave Contribution Margin | What is the formula for ... - elucidate.org.au
