Final answer:
In CVP analysis for two or more products, considering the sales mix is important. By incorporating the sales mix into the calculations, a business can better understand how changes in the product mix may affect profitability.
Step-by-step explanation:
In cost-volume-profit (CVP) analysis for two or more products, it is important to consider the sales mix in CVP calculations. The sales mix refers to the proportion or ratio of each product's sales within the total sales of the business.
By incorporating the sales mix into the CVP calculations, a business can better understand how changes in the product mix may affect its overall profitability. For example, if one product has a higher contribution margin than another, selling more of that product may lead to higher profits.
Let's assume a company sells two products: Product A and Product B. The sales mix is determined by the ratio of their respective sales. If the company sells twice as much of Product A as Product B, the sales mix would be 2:1. This information would then be used to calculate the overall contribution margin and break-even point for the company.