In Multiproduct Situations,when Sales Mix Shifts Toward the Product with the Highest

question 199

Multiple Choice

In multiproduct situations,when sales mix shifts toward the product with the highest contribution margin then:

• A)total revenues will decrease.
• B)operating profit will increase.
• C)break-even quantity will increase.
• D)total contribution margin will decrease.

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Definitions:

Equity Securities

Financial instruments that represent ownership in a company, such as stocks, entitling holders to dividends and capital gains.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.

Debt Securities

Financial instruments representing money borrowed that must be repaid, often with interest, including bonds, bills, and notes.

Fair Value

The estimated price at which an asset can be bought or sold in a current transaction between willing parties.