Steadigen Company sells two generators-Model A and Model B-for $454 per unit and $396 per unit,respectively.The variable cost of Model A is $408 per unit and of Model B is $314 per unit.If Steadigen Company's sales incentives reward sales of the goods with the highest contribution margin per unit,the sales force will be motivated to push sales of Model A more aggressively than Model B.

Question

Quizplus · Accepted Answer

The contribution margin per unit for Model A is $454 - $408 = $46, and for Model B is $396 - $314 = $82. Since Model B has a higher contribution margin per unit than Model A, the sales force would be motivated to push sales of Model B more aggressively.

Steadigen Company Sells Two Generators-Model a and Model B-For $454