Contribution Margin: The process or theory which is used to judge the benefit given by each unit of the goods produced is called as contribution margin. Break-Even Point: The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain. To Explain: The way in which the Company’s break-even point in units will change, if the sales mix is shifted to sell more number of lower-priced tires.

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Chapter 6, Problem 8Q

To determine

Contribution Margin:

The process or theory which is used to judge the benefit given by each unit of the goods produced is called as contribution margin.

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Explain: The way in which the Company’s break-even point in units will change, if the sales mix is shifted to sell more number of lower-priced tires.

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