9 Normally, a business concern will select the product mix which gives the maximum profit. Product mix is the ratio in which various products are produced and sold. The marginal costing technique helps management in taking appropriate decisions regarding the product mix, i.e., in changing the ratio of product mix so as to maximise profits. The technique not only helps in dropping unprofitable products from the mix but also helps in dropping unprofitable departments, activities etc. Consider the following illustrations: Illustration 10: (Product Mix) The following figures are obtained from the accounts of a departmental store having four departments. Departments Particulars Sales A 5,000 B 8,000 C 6,000 (Figures In Rs.) D Total 7,000 26,000 6,000 4,000 2,000 1,000 2,000 15,500 1,000 6,500 Marginal Cost 5,500 Fixed Cost 500 (Apportioned) Total Cost 6,000 Profit/Loss(-) 1,000 (-) 10,000 2,000 3,000 3,000 3,000 22,000 4,000 4,000 On the above basis, it is decided to close down dept. B immediately, as the loss shown is the maximum. After that dept. A will be discarded. What is your advice to the management