Question

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

Answer 1

Ans: 1. True.

Reason: in general sense profit depend on the margin achieved on sales of product and if company move to the low margin product profit will get down even if total sales increase as proportion of expenditure will also increase with increase in saleasof low margin product. So it will greater sales equilibrium to match all product margin.

Ans 2: false

Reason : break even point depend on fixed cost and contribution per unit so change in no of units sold willnt impact the break even point.