The Impact on Net Operating Income of a Small Change

question 320

Multiple Choice

The impact on net operating income of a small change in sales for a segment is best predicted by using:

• A) the contribution margin ratio.
• B) the segment margin.
• C) the ratio of the segment margin to sales.
• D) net sales less segment fixed costs.

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Definitions:

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Economic Generalization

Broad principles or concepts in economics that apply across a range of scenarios and are used to simplify the analysis of economic behaviors and trends.

Confidence

The degree of optimism or pessimism that consumers and businesses feel about the overall state of the economy and their personal financial situations, influencing their spending and investment decisions.

Constructing Models

The process of creating representations of real-world phenomena in order to test theories, predict outcomes, and analyze scenarios.