Product 1 Has a Contribution Margin of $6

question 113

Multiple Choice

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit.Total fixed costs are $300,000.Sales mix and total volume varies from one period to another.Which of the following is true?

• A) At a sales volume in excess of 25,000 units of 1 and 25,000 units of 2, operations will be profitable.
• B) The ratio of net profit to total sales for 2 will be larger than the ratio of net profit to total sales for 1.
• C) Variable costs are $1.50 more for 2 than for 1.
• D) The ratio of contribution margin to total sales always will be larger for 1 than for 2.

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