Fletcher Company Has Three Products with the Following Characteristics Fixed Costs = $30,000 Per Month

question 17

Multiple Choice

Fletcher Company has three products with the following characteristics:
$\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { Product B } & \text { Product C } \\\hline \begin{array} { l } \text { Monthly sales in } \\\text { dollars }\end{array} & \$ 60,000 & \$ 80,000 & \$ 100,000 \\\hline \begin{array} { l } \text { Contribution margin } \\\text { ratio }\end{array} & 20 \% & 40 \% & 16 \% \\\hline\end{array}$ Fixed Costs = $30,000 per month.


-If total units sold remain unchanged,but the sales mix shifts more heavily toward Product C,what would the overall contribution margin ratio be expected to do?

• A) Increase.
• B) Decrease.
• C) Remain unchanged.
• D) The effect cannot be predicted without additional information.

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Definitions:

Thyroid

An endocrine gland located anteriorly at the base of the neck.

Pineal

Pertaining to the pineal gland, a small endocrine gland in the brain that produces melatonin, a hormone that regulates sleep patterns.

Achromatic Vision

The inability to see color, resulting in perceiving the world in shades of gray.

Protanopia

A type of color blindness characterized by a difficulty in distinguishing colors in the red-green spectrum.