Arturo Company sells two generators—Model A and Model B—for $454 and $396, respectively
The variable cost of Model A is $408 and of Model B is $314. If Arturo Company's sales incentives reward sales of the goods with the highest contribution margin, the sales force will be motivated to push sales of Model A more aggressively than Model B.
Indicate whether the statement is true or false
FALSE .Model A Model B
Sales price $454 $396
Less: variable cost (408 ) (314 )
Contribution margin $46 $82
The contribution margin of Model B ($82 ) is more than that of Model A ($46 ). The sales team will be motivated to push sales of Model B more aggressively than Model A.
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