If Ticker's sales mix shifts toward Product A while the total number of units sold remains the same, that means Ticker is selling more of Product A and less of Product B. Product A has a lower contribution margin than Product B. If the company is selling more of the lower contribution margin product and less of the higher contribution margin product, the total contribution margin will decrease. Because the total contribution margin decreases while the total fixed costs remain the same, operating income will also decrease.
If Ticker's sales mix shifts toward Product A while the total number of units sold remains the same, that means Ticker is selling more of Product A and less of Product B. Product A has a lower contribution margin than Product B. This change in the product mix will cause the weighted average contribution margin to decrease, because more weight will be put on the product with the lower contribution margin. The decrease in the weighted average contribution margin will cause the total number of units necessary to break even to increase, not decrease.
If Ticker's sales mix shifts toward Product A while the total number of units sold remains the same, that means Ticker is selling more of Product A and less of Product B. Product A has a lower contribution margin than Product B. If the company is selling more of the lower contribution margin product and less of the higher contribution margin product, the total contribution margin will decrease, not increase.
The individual contribution margin ratios for Products A and B will not change.
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