Radial Company sells two types of radial tires The lower priced model is guaranteed for only 40,000 miles the higher priced model is guaranteed for 100,000 miles The unit contribution margin on the higher priced tire is twice as high as that of the lower priced tire If the sales mix shifts so that ...

The 100000mile tire has a higher unit contribution mar ...

Radial Company sells two types of radial tires. The lower-priced model is guaranteed for only 40,000 miles;

Question:

Radial Company sells two types of radial tires. The lower-priced model is guaranteed for only 40,000 miles; the higher-priced model is guaranteed for 100,000 miles. The unit on the higher-priced tire is twice as high as that of the lower-priced tire. If the sales mix shifts so that the company begins to sell more units of the lower-priced tire, explain how the company’s break-even point in units will change.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...