Jones Company Sells Two Products, Gumbo and Jumbo

question 73

Multiple Choice

Jones Company sells two products, Gumbo and Jumbo. Gumbo has a 45% contribution margin and Jumbo has a 55% contribution margin. Given these contribution margin percentages and assuming that other factors are equal, what should Jones Company do?

• A) It should emphasize Gumbo
• B) It should emphasize Jumbo
• C) It should emphasize both products, since they are equally profitable
• D) No recommendation can be made from the data given

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Definitions:

Value-adding Capabilities

The ability of a company or individual to increase the worth of a product or service by improving its features, functionality, or quality.

Elasticity of Demand

A measure of how much the quantity demanded of a good or service changes in response to a change in its price.

Corporate Vertical Marketing System

A unified marketing system in which a single corporate entity controls the entire process from production to sale, ensuring streamlined operations and branding.

Successive Stages

Refers to the sequential steps or phases in a process or development.