Becky's Bakery Sells Three Large Muffins for Every Two Small

question 35

Multiple Choice

Becky's Bakery sells three large muffins for every two small ones.A small muffin sells for $3.50 with a variable cost of $2.00.A large muffin sells for $6.00 with a variable cost of $3.00.What is the weighted-average contribution margin? (Round any intermediate calculations and your final answer to the nearest cent.)

• A) $4.75 per muffin
• B) $2.25 per muffin
• C) $4.50 per muffin
• D) $2.40 per muffin

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Definitions:

Cost Formula

An equation or method used to predict the cost associated with a certain level of activity or production volume.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, highlighting how much contribution towards fixed costs and profit is made per unit sold.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and sales commissions.

Gross Margin

Gross margin is a company's net sales revenue minus its cost of goods sold, representing the efficiency with which it can produce and sell its products for a profit.