contestada

Explain how a shift in the sales mix could result in both a higher break-even point and a lower net income.

Respuesta :

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.

Learn more about break-even point:

https://brainly.com/question/18123993

#SPJ4