A shift in the sales mix from products with high contribution margin ratios toward products with low contribution margin ratios will raise the break-even point for the company as a whole.

Question

Quizplus · Accepted Answer

The contribution margin ratio is the difference between the selling price of a product and its variable costs, expressed as a percentage of the selling price. Products with high contribution margin ratios contribute more to covering fixed costs and contribute more to profits than products with low contribution margin ratios. Therefore, a shift in sales mix toward products with low contribution margin ratios will reduce the overall contribution margin of the company and increase the break-even point.

A Shift in the Sales Mix from Products with High