Question

All other things being equal, a company that sells multiple products should attempt to structure its sales mix so the greatest portion of the mix is composed of those products with the highest _______.

Answer 1

Answer: contribution margin

Explanation:

The contribution margin is the incremental money that is generated for each product or unit sold after the variable portion of the costs of the firm's has been deducted. The contribution margin is calculated as the subtraction of the variable cost per unit from the selling price per unit.

The contribution margin shows how the contribution of a particular product to the profit of the company. It shows the profit potential of a product that is offered by a company and also shows the number of sales that can help to cover the fixed cost of the company. The remaining revenue gotten after the fixed cost has been covered is the profit generated.

Contribution margin= Sales revenue - Variable cost