Acme Company Sells Two Products

question 37

Multiple Choice

Acme Company sells two products. Product X has a contribution margin of $6.00 per unit, and Product Y has a contribution margin of $7.50 per unit. Total fixed costs are $400,000. Sales mix and total volume varies from one period to another. Which statement best describes this situation?

• A) Selling less than 25,000 units of each product will result in a loss.
• B) Variable costs are $1.50 higher for Product X than for Product Y.
• C) The ratio of contribution to total sales always will be larger for Product X than for Product Y.
• D) The ratio of net profit to total sales for Product Y will be larger than the ratio of net profit to total sales for Product X.

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Definitions:

Complexes

Psychological concepts referring to a core pattern of emotions, memories, perceptions, and wishes in the personal unconscious organized around a common theme.

Supraordinate

A term used globally to describe a higher level or overarching category or concept that includes subordinate elements or instances.

Self

The individual's conception and expression of their identity, comprising their thoughts, beliefs, and feelings about who they are.

Unconscious Pattern

Behaviors, thoughts, or emotions that operate below the level of conscious awareness, influencing an individual's actions and reactions.