Isabellas, inc., a local convenience store, sells soft drinks. it sells two large drinks for every small drink. a large drink sells for $3.00 with a variable cost of $0.80. a small drink sells for $1.00 with a variable cost of $0.50. the weighted average contribution margin is intermediate calculations and your final answer to the nearest cent.) (round any select one: o a. $1.35 per drink b. $4.90 per drink c. $2.20 per drink d. $1.63 per drink

Option (D) is correct.

Explanation:

Large drink:

Contribution margin per unit = Selling price - Variable cost

                                                = $3.00 - $0.80

                                                = $2.20

Small drink:

Contribution margin per unit = Selling price - Variable cost

                                                = $1.00 - $0.50

                                                = $0.50

Sales mix ratio 2:1  

(2/3 × 100 = 66.67% for large drink

and 1/3 × 100 = 33.33% for small drink

Weighted contribution margin:

= Contribution margin per unit × sales mix percentage

= ($2.20 × 66.67%) + ($0.50 × 33.33%)

= $1.47 + 0.17

= $1.63 or $1.64 (approx)

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