Question
Cost-Volume-Profit (CVP) Analysis for Sales Mix Decision : A company sells two products, Product A and Product B. The selling prices, variable costs, and contribution
Cost-Volume-Profit (CVP) Analysis for Sales Mix Decision: A company sells two products, Product A and Product B. The selling prices, variable costs, and contribution margins per unit for each product are as follows:
Product A: Selling price $50, variable cost $30, contribution margin $20
Product B: Selling price $70, variable cost $40, contribution margin $30
The company has limited production capacity and can only produce 1,000 units of each product. Determine the optimal sales mix that maximizes the company's total contribution margin. Discuss how this analysis guides product pricing and production decisions.
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