In multiproduct situations when sales mix shifts toward the product with the highest contribution margin,operating profit will be higher.

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Quizplus · Accepted Answer

This is because contribution margin is the amount each product contributes towards covering the fixed costs and generating profit. Thus, a shift in sales mix towards the product with the higher contribution margin will result in a higher operating profit as more revenue is generated from the product with a higher margin.

In Multiproduct Situations When Sales Mix Shifts Toward the Product