How To Calculate Weighted Average Contribution Margin?
To calculate the Weighted Average Contribution Margin (WACM), you combine the contribution margins of multiple products or services, weighted by their sales mix.
The formula to calculate WAACM is:
WACM= ∑ (Contribution Margin per Unit x Sales Mix)/ Total Sales Mix
Where;
- Contribution Margin per Unit = Selling Price per Unit−Variable Cost per Unit
- Sales Mix = The proportion of each product’s sales to total sales.
It’s like calculating your class grade when each subject has a different weight.
