In Making Product Mix Decisions Under Constraining Factors,a Company Should

question 27

True/False

In making product mix decisions under constraining factors,a company should maximise sales of the product with the highest contribution margin per unit.

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Definitions:

Net Operating Income

The net profit of a business is calculated by deducting operating expenses from the gross profit and before accounting for interest and taxes.

Sales Volume

The number of units sold within a reporting period, used as a measure of business activity.

Margin of Safety

The difference between actual sales and the break-even point, indicating how much sales can drop before a company incurs a loss.

Break-even Sales

The instance at which all costs are balanced by all revenues, resulting in neither gain nor loss.