Resolute Company sells two generators-Model A and Model B-for $456 per unit and $394 per unit,respectively.The variable cost of Model A is $406 per unit and of Model B is $304 per unit.The company will generate lower revenues but a higher net income if it sells more of Model B than Model A.

Question

Quizplus · Accepted Answer

Model B has a higher contribution margin ($90) compared to Model A ($50), meaning it contributes more to covering fixed costs and generating profit per unit sold, leading to higher net income despite lower revenue.

Resolute Company Sells Two Generators-Model a and Model B-For $456