Q26RQ
Question
How can CVP analysis be used by companies with multiple products?
Step-by-Step Solution
Verified Answer
The combination of products used that sums up total sales is known as the sales mix.
1Step 1: Meaning of Sales mix
The sales mix refers to the assortment of products utilized to calculate total sales. To calculate the CVP for sales mix same formulas can be used with multiple products.
2Step 2: How can companies with multiple products use CVP analysis.
Companies can use the weighted-average contribution margin of all the company’s products to calculate CVP analysis. In addition, it helps the company to minimize the labor, and time and they also get to know which product would be the most profitable
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