Certified Management Accountant Practice Exam 2025 - Free CMA Practice Questions and Study Guide

The Weighted Average Contribution Margin Ratio is determined by dividing the weighted average unit contribution margin by the weighted average unit selling price. This calculation provides insight into how much of each sales dollar contributes to covering fixed costs and generating profit after variable costs have been deducted.

The weighted average unit contribution margin represents the difference between sales price and variable costs, weighted by the proportion of each product sold. Similarly, the weighted average unit selling price accounts for the sales price of each product, also weighted by the volume sold.

Thus, the division of the weighted average unit contribution margin by the weighted average unit selling price yields a ratio that reflects the contribution margin as a percentage of total sales, which is crucial for decision-making regarding pricing, product mix, and profitability analysis. This ratio helps management assess the effectiveness of the sales strategy and understand how changes in sales volume can impact overall profitability.

The other choices do not accurately capture the relationship between contribution margin and sales price, thereby not offering the correct method to determine the Weighted Average Contribution Margin Ratio.