Acme Company sells two products. Product X has a contribution margin of $6.00 per unit, and Product Y has a contribution margin of $7.50 per unit. Total fixed costs are $400,000. Sales mix and total volume varies from one period to another. Which statement best describes this situation?
A) Selling less than 25,000 units of each product will result in a loss.
B) Variable costs are $1.50 higher for Product X than for Product Y.
C) The ratio of contribution to total sales always will be larger for Product X than for Product Y.
D) The ratio of net profit to total sales for Product Y will be larger than the ratio of net profit to total sales for Product X.

Question

Quizplus · Accepted Answer

Selling less than 25,000 units of each product will result in a loss.

Acme Company Sells Two Products