Which of the following is a TRUE statement about sales mix?
A)Profits may decline with an increase in total monetary sales if the sales mix shifts to sell more of the high contribution margin product.
B)Profits may decline with an increase in total monetary sales if the sales mix shifts to sell more of the lower contribution margin product.
C)Profits will remain constant with an increase in total monetary sales if the total sales in units remains constant.
D)Profits will remain constant with a decrease in total monetary sales if the sales mix also remains constant.

Question

Quizplus · Accepted Answer

Sales mix refers to the proportion of different products or services being sold. If the sales mix shifts to sell more of the lower contribution margin product, profits may decline because the contribution margin per unit is lower, meaning less profit is being made per sale. Therefore, an increase in total monetary sales does not always lead to an increase in profits if the sales mix is not favorable.

Which of the Following Is a TRUE Statement About Sales