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What may be driving the profitability down

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Reference no: EM132892319

Question - You work for a company that makes multiple products including perfumes (two types), dishwashing soap (two types), toothpaste (two types). You offer each of the products in two types- a basic economy cheap version and a fancy higher end expensive version. P&L statements show that the fancy higher end expensive versions of perfumes, dishwashing soap, toothpaste are highly profitable, while the basic versions are struggling. It is confusing given that the basic versions are the high volume products and the fancy versions are the low volume products. Every time the company increases the production of the profitable fancy versions, the overhead costs increase and overall profit margin declines. What may be driving the profitability down?

Reference no: EM132892319

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