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 income.

Question

Quizplus · Accepted Answer

Selling more of Model B generates lower revenues due to its lower selling price, but higher net income because it has a higher contribution margin (selling price minus variable cost) compared to Model A.

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