A Shift Towards a Mix of Products with a Lower

question 7

Multiple Choice

A shift towards a mix of products with a lower contribution margin per unit will MOST likely result in a(n) :

• A)favourable sales-quantity variance.
• B)favourable sales-mix variance.
• C)unfavourable sales-mix variance.
• D)unfavourable sales-quantity variance.

---

Definitions:

Break Even

It is the point at which total costs and total revenues are equal, meaning there is no profit or loss.

Operating Income

Earnings before interest and taxes (EBIT), representing a company’s profit from its core business operations.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Fixed Costs

Costs that do not vary with the volume of output produced, such as rent, salaries, and insurance premiums.