Ans - would decrease (Option 2nd)
Particulars | B32L | K84B |
Sales | $46000 | $27000 |
Less: Variable expenses | ($13800) | ($14670) |
Contribution margin | $32200 | $12330 |
Contribution margin ratio (Contribution margin / Sales) |
70% ($32200 / $46000) |
46% ($12330 / $27000) |
Higher contribution means lower breakeven point, so if sales mix, shift towards product B32L, then breakeven point of entire company would decrease as resulted from the above statement, we see that product B32L has higher contribution margin ratio.
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