Arturo Company's model A generator sells for $456, and model B sells for $390. The variable cost of model A is $404 and of model B is $320. If Arturo sells more of model B than model A, it will generate lower revenues, but higher net profit.

Question

Quizplus · Accepted Answer

If Arturo sells more of model B, the revenue per unit is lower, but the profit margin (selling price minus variable cost) is higher for model B ($70) compared to model A ($52), leading to higher net profit.

Arturo Company's Model a Generator Sells for $456, and Model