Respuesta :
Effects of shifts in the sales mix on contribution margin and the break-even point can be because of the below-mentioned reasons.
For break-even point refer to the attached image for a multi-product company Sales mix refers to the proportions of a company's products that are sold.
The goal of this is to find the combination, or mix, that will produce the highest profit.
Changes in a company's sales mix can cause variations in profits.
Even when total sales increase, a shift in the sales mix from high-margin items to low-margin items can result in total profits falling.
On the contrary, when there is a shift in the sales mix from low-margin items to high-margin items, can have the opposite effect where total profits can increase even when total sales decrease.
If a company sells more than one product, the break-even analysis becomes more perplexing than the break-even analysis of a single product.
The reason for the above is that different products will have different selling prices, costs, and contribution margins.
Hence, the break-even point is determined by the mix of products sold.
Learn more about sales mix:
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