Select the incorrect statement regarding cost-volume-profit relationships for multiple products.
A) For a company that sells many different products, the level of the break-even point is affected by the company's sales mix.
B) An increase in sales volume accompanied by a change in sales mix could cause a company's profits to decrease.
C) For a multi-product company, cost-volume-profit analysis can be done using the contribution margin ratio of the most profitable product.
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

Using the contribution margin ratio of the most profitable product would not accurately represent the overall cost-volume-profit relationships for multiple products. It is important to consider the contribution margin ratio of each product and their sales mix in order to accurately determine the break-even point and profits of the company.

Select the Incorrect Statement Regarding Cost-Volume-Profit Relationships for Multiple Products