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.