Product 1 Has a Contribution Margin of $6

question 128

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 statement is true?

• A)At a sales volume in excess of 25,000 units of Product 1 and 25,000 units of Product 2, operations will be profitable.
• B)The ratio of net profit to total sales for Product 2 will be larger than the ratio of net profit to total sales for Product 1.
• C)Variable costs are $1.50 more for Product 2 than for Product 1.
• D)The ratio of contribution to total sales always will be larger for Product 1 than for Product 2.

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Definitions:

Independent Populations

Populations that are not related or affected by each other, allowing for assumptions of independence in statistical tests.

T-test

A statistical test used to compare the means of two groups to determine if there is a significant difference between them.

Degrees of Freedom

The count of independent figures or measures that can be designated to a statistical distribution.

Distribution

The way in which something is shared out or spread across a range of values, areas, or people.