What are the assumptions underlying sales mix and cost volume profit that are potentially misleading?Explain
The overall concept of a contribution margin is pretty straightforward – it is how much each unit contributes to covering fixed costs and eventually profit.
Instead let’s talk about sales mix. This relates to the mix of products. How do changes in the mix of products impact breakeven? How could a shift in sales mix result in both a higher breakeven point and a lower net income? Use specific examples from a company you know something about. (for instance for Apple you could do laptop vs. I-series items)
What are the assumptions underlying sales mix and cost volume profit that are potentially misleading?