It is critical for management to understand its overall sales mix when using contribution margin income statements because

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It is important for management to understand the sales mix because different products can have vastly different contribution margins even with the same level of sales. This can impact their decision making regarding the allocation of resources and focus on certain product lines. Understanding the contribution margin for each product is necessary for accurate decision making. Option A and B are not fully relevant and Option C is not accurate as overhead allocation should be based on usage across product lines rather than spread evenly.

It Is Critical for Management to Understand Its Overall Sales