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Bond [772]
3 years ago
11

Barnes Company sells two products, X and Y. For the coming year, Barnes predicts sales of 5,000 units of X and 10,000 units of Y

. The contribution margins per unit of products X and Y are $5 and $4, respectively. The weighted-average contribution margin is $6.50 per unit.
A. True
B. False
Business
1 answer:
sveta [45]3 years ago
5 0

Answer:

B. False

Explanation:

The statement is False.

This conclusion can be reached just by analyzing the data provided. The weighted-average contribution margin ($6.50) cannot be higher than all of the individual contribution margins ($5 and $4). The actual weighted-average contribution margin is:

WACC = \frac{5,000}{5,000+10,000}*\$5 +\frac{10,000}{5,000+10,000}*\$4 \\WACC = \$4.33

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2 years ago
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2 years ago
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