A shift in the sales mix could result in both a higher break-even point and a lower net income.
The relative proportions in which a company's products are sold are referred to as the sales mix.
If the sales mix shifted from high contribution margin products to low contribution margin products, the break-even point would rise and net operating income would fall.
Such a shift would cause the company's average CM ratio to fall, resulting in less total contribution margin for a given amount of sales.
As a result, net operating income would fall.
The break-even point would be higher with a lower contribution margin ratio because more sales would be required to cover the same amount of fixed costs.
Hence, a shift in the sales mix could result in both a higher break-even point and a lower net income.
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