Answer the following question(s)using the information below.Specialty Wheels Ltd.manufactures three different product lines, Model X, Model Y, and Model Z.Considerable market demand exists for all models.The following per unit data apply:

-Decisions on product mix involving multiple products, should be based on which of the following?
A)the variable cost differential between the products
B)the differential selling prices between the products
C)fixed cost savings
D)the amount of idle capacity
E)individual product contribution margin totals

Question

Answer the following question(s)using the information below.Specialty Wheels Ltd.manufactures three different product lines, Model X, Model Y, and Model Z.Considerable market demand exists for all models.The following per unit data apply:
 
-Decisions on product mix involving multiple products, should be based on which of the following?
A)the variable cost differential between the products 
B)the differential selling prices between the products 
C)fixed cost savings 
D)the amount of idle capacity 
E)individual product contribution margin totals

Quizplus · Accepted Answer

Decisions on product mix involving multiple products should be based on individual product contribution margin totals. This is because the contribution margin represents the amount of revenue available to cover fixed costs and generate profit. Therefore, the products with the highest contribution margin per unit should be prioritized in the product mix to maximize overall profitability.

Answer the Following Question(s)using the Information Below