Sammie's Pizza sells an average of 150 pizzas per week, of which 20% are single-topping pizzas and 80% are supreme pizzas wi

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2 years ago

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Sammie's Pizza sells an average of 150 pizzas per week, of which 20% are single-topping pizzas and 80% are supreme pizzas wi

th multiple toppings. Singles sell for $ 8 each and incur variable costs of $ 2. Supremes sell for $ 12 each and incur variable costs of $ 6. Which pizza should Sammie's Pizza promote to maximize profits? A. Singles because they contribute the highest total contribution margin. B. Supremes because they have the highest contribution margin ratio. C. Both should be promoted equally because they have the same contribution margin per unit. D. Singles because they have the highest contribution margin ratio.

Business

1 answer:

Sergeu [11.5K] · Answer 1 · 2022-01-19T06:55:12+03:00

Answer:C. . Both should be promoted equally because they have the same contribution margin per unit.

Explanation:

Contribution on a product is the difference between the sales price and the variable cost per unit. A good that contributes positive contribution is viable for production.

Both product should be produce since they have the same contribution ratio and margin per unit.

Sammie's Pizza sells an average of 150 pizzas per​ week, of which 20​% are​ single-topping pizzas and 80​% are supreme pizzas wi

Sammie's Pizza sells an average of 150 pizzas per week, of which 20% are single-topping pizzas and 80% are supreme pizzas wi