All else being equal,a company earns more income by selling high-contribution margin products than by selling an equal number of low-contribution margin products.

Question

Quizplus · Accepted Answer

Contribution margin is the amount by which a product's selling price exceeds its variable costs per unit. Therefore, high-contribution margin products generate more income for a company as they contribute a higher amount towards covering fixed costs and generating profits. Selling an equal number of low-contribution margin products would result in lower income due to the lower amount of profit contributed by each unit sold.

All Else Being Equal,a Company Earns More Income by Selling