Question

A shift in the sales mix from products with a high contribution margin ratios toward products...

A shift in the sales mix from products with a high contribution margin ratios toward products with low contribution margin ratios will raise the break-even point for the company as a whole. True or False

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer: TRUE.

Explanation

  • A shift in sales mix in favor of product with lower contribution margin ratio will rises the breakeven point why because it will lead to a DECREASE in “Weighted average contribution margin ratio”.

  • We know that ‘Weighted average contribution margin’ Is used as a ‘denominator’ value for computing Break Even level,

  • as Break Even Sales = Fixed Cost / Weighted Average contribution margin ratio.

  • When denominator Decreases (without any increase in numerator Fixed Cost), the break even will decrease.
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1.A shift in the sales mix from high-margin items to low-margin items can cause total profits...
1.A shift in the sales mix from high-margin items to low-margin items can cause total profits to decrease even though total sales may increase. T/F 2.A decrease in the number of units sold will decrease the break-even point. T/F
True or False: 1. A company with high operating leverage will experience a lower reduction in...
True or False: 1. A company with high operating leverage will experience a lower reduction in net operating income in a period of declining sales than will a company with low operating leverage 2. A shift in the sales mix from products with high contribution margin ratios towards products with low contribution margin ratios will raise the break-even point -------------------------- 3. Which of the following is true regarding the contribution margin ratio of a single product company? A. As fixed...
Rastacan Enterprises distributes two products: Model X300 and Model Z900. Monthly sales and the contribution margin...
Rastacan Enterprises distributes two products: Model X300 and Model Z900. Monthly sales and the contribution margin ratios for the two products follow: Product : Model X300        Model Z900 Total                      Sales: $700,000 $300,000 $1,000,000 Contribution Margin Ratio 60% 70% ?    The company's fixed expenses total $598,500 per month. 1. Prepare a contribution-format income statement for the company as a whole. 2. Compute the break-even point for the company based on the current...
________ is the excess of sales over the cost of goods sold. A) Gross margin B)...
________ is the excess of sales over the cost of goods sold. A) Gross margin B) Contribution-margin ratio C) Variable-cost ratio D) Contribution margin Answer: Which statement is FALSE? A) Each different sales-mix of products has a different break-even point. B) Changes in the sales-mix of products sold affects a company's net operating profit. C) Changes in the sales-mix of products sold affects a company's contribution margin. D) If the sales-mix of products sold changes, the break-even point does not...
Assume MIX Inc. has sales volume of $1,162,000 for two products with May sales and contribution...
Assume MIX Inc. has sales volume of $1,162,000 for two products with May sales and contribution margin ratios as follows: Product A: Sales $454,000; Contribution Margin Ratio 30% Product B: Sales $708,000; Contribution Margin Ratio 60% Required: Assume MIX’s fixed expenses are $318,000. Calculate the May total contribution margin, operating income, average contribution margin ratio, and breakeven sales volume. (Round "Average contribution margin ratio" answer to 2 decimal places. Round up "Breakeven sales volume" answer to nearest whole dollar.)
Sales Mix and Break-Even Analysis Michael Company has fixed costs of $1,021,330. The unit selling price,...
Sales Mix and Break-Even Analysis Michael Company has fixed costs of $1,021,330. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Product Selling Price Variable Cost per Unit Contribution Margin per Unit Q $440 $240 $200 Z 560 500 60 The sales mix for products Q and Z is 35% and 65%, respectively. Determine the break-even point in units of Q and Z. If required, round your answers...
**This is the full question, but I only need the Contribution Margin, Sales Mix and Target...
**This is the full question, but I only need the Contribution Margin, Sales Mix and Target Profit. Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow. Units Total Total Total Machine Produced Lumber Cost Utilities Cost Depreciation Cost 13,000 shelves $156,000 $15,950 $145,000 26,000 shelves 312,000 30,900 145,000 52,000 shelves 624,000 60,800...
Sales mix and break-even analysis Conley Company has fixed costs of $15,525,000. The unit selling price,...
Sales mix and break-even analysis Conley Company has fixed costs of $15,525,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit Yankee $175 $100 $75 Zoro 255 180 75 The sales mix for products Yankee and Zoro is 20% and 80%, respectively. Determine the break-even point in units of Yankee and Zoro of the overall (total) product, E. If...
Contribution Margin and Contribution Margin Ratio For a recent year, Wicker Company-owned restaurants had the following...
Contribution Margin and Contribution Margin Ratio For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions): Sales $20,300 Food and packaging $7,910 Payroll 5,100 Occupancy (rent, depreciation, etc.) 3,680 General, selling, and administrative expenses 3,000 $19,690 Income from operations $610 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in...
E6-10 (Algo) Calculating Contribution Margin, Contribution Margin Ratio, Margin of Safety [LO 6-2, 6-3] Last month,...
E6-10 (Algo) Calculating Contribution Margin, Contribution Margin Ratio, Margin of Safety [LO 6-2, 6-3] Last month, Laredo Company sold 540 units for $70 each. During the month, fixed costs were $4,704 and variable costs were $42 per unit. Required: 1. Determine the unit contribution margin and contribution margin ratio. 2. Calculate the break-even point in units and sales dollars. 3. Compute Laredo’s margin of safety in units and as a percentage of sales. Complete this question by entering your answers...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT