Which is the following is the most appropriate reason that sales mix decisions should be made using variable costing?
A)All costs,including fixed costs,are controllable by upper management in the long run.
B)To increase profits,businesses should emphasize the products with the highest contribution margin.
C)Sales mix decisions primarily focus on fixed costs.
D)Fixed costs do not affect the operating profit in the long-run.

Question

Quizplus · Accepted Answer

Sales mix decisions involve determining which products to produce or sell and in what proportions. Since variable costing focuses on the variable costs associated with producing a product, it is a better tool for making sales mix decisions that require understanding the contribution margin of each product. By emphasizing the products with the highest contribution margin, a business can increase its profits. Fixed costs, which are not included in the calculation of contribution margin, are not the primary focus of sales mix decisions.

Which Is the Following Is the Most Appropriate Reason That