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.

---

Definitions:

Adaptation

A process by which organisms adjust to their environment to enhance survival and reproductive success.

Organisms Change

Organisms change refers to the process of evolution, where species undergo modifications in traits over generations due to genetic variation and natural selection.

Jean-Baptiste Lamarck

An 18th-century French naturalist known for his theory of inheritance of acquired characteristics, a hypothesis preceding Darwin's theory of natural selection.

Natural Selection

The process by which organisms better adapted to their environment tend to survive and produce more offspring.