Suppose a firm sells two products—A and B. For Product A, the variable cost is Rs 2 and the sale price is Rs 4 per unit. For Product B, the variable cost and the sale price are Rs 3 and Rs 5...

Suppose a firm sells two products—A and B. For Product A, the variable cost is Rs 2 and the sale price is Rs 4 per unit. For Product B, the variable cost and the sale price are Rs 3 and Rs 5 respectively per unit. The fixed cost of the firm is Rs 40,000. Now the marginal contribution for Product A would be [(4 – 2)/4] or 50%. Product B has a marginal contribution of [(5 – 3)/5] or 40%.