Question

Saved Dietrick Corporation produces and sells two products. Data concerning those products for the most recent month appear below. Sales Variable expenses Product B32L $46,000 $13,800 Product K84B $27,000 $14,670 Fixed expenses for the entire company were $42.550 If the sales mix were to shift toward Product B32L with total sales remaining constant, the overall break-even point for the entire company Multiple Chole could increase or decrease would decrease would not change

Answer 1

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.