IM Enterprises sells two products, Crunchies and Munchies. Crunchies have a 32 p
ID: 2467372 • Letter: I
Question
IM Enterprises sells two products, Crunchies and Munchies. Crunchies have a 32 percent contribution margin and Munchies have a 35 percent contribution margin. Profit earned from each box of Crunchies is $8 and the profit earned from each box of Munchies is $7. If the company is planning to generate revenue of $100, what should the company do?
A. No reccomndation can be made by the data
B. It should sell more crunchies
C. It should sell an equal number of each product
D. It should sell more munchies
Explanation / Answer
D. It should sell more munchies
This is because Munchies have higher contribution margin. Even though profit from each box of Munchies is less as compared to profit from each box of crunchies. When the company will sell more munchies contribution will increase at higher rate and subsequently profit as Fixed costs remain same.