CAF-5 · Chapter 13 · Question 9 of 10
Solvent Limited sells Product A and Product B in a standard ratio of 2:1. The contribution margin is Rs. 10 for Product A and Rs. 20 for Product B. What is the weighted average contribution margin per unit of the mix?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 13.33
Explanation
The bundle/mix consists of 2 units of A and 1 unit of B (Total 3 units). Contribution of 2 units of A = 2 × 10 = Rs. 20. Contribution of 1 unit of B = 1 × 20 = Rs. 20. Total contribution of the mix (3 units) = Rs. 40. Weighted average contribution per unit = Rs. 40 ÷ 3 units = Rs. 13.33 per unit.
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