Question

Product A's contribution margin ratio (60%) is greater than Product B's contribution margin ratio (40%). Product A's contribution margin ratio can be contributed to its lower promotion and sales commissions costs. Thus, management should consider a. increasing the price of Product B. b. emphasizing Product A in its marketing plans. c. reducing Product B's promotion and sales commissions costs. d. All of these choices are correct.

Answer 1

Answer:

D. All the answers are correct to increase the benefit of the company. here briefly why.

Explanation:

A . increasing the price of product B (whenever possible) does not affect its variable costs or fixed costs, which would result in a higher profit margin.

B. Increasing the marketin plans of product A means an increase in costs, if with fixed costs for advertising campaigns the contribution margin per unit will be the same, but  total sales increase. If the marketing campaign affects variable costs (such as reducing the sales price by a certain amount), it will result in a smaller unit contribution, but a larger amount of sales, which will increase profits.

C. The reduction of these variable or any other variable cost (whenever possible) of product B will result in a greater unit contribution, then, increase profits