If the Total Contribution Margin Increases and Fixed Costs Do

question 88

Multiple Choice

If the total contribution margin increases and fixed costs do not change, pre-tax profit:

• A) decreases by an equal amount.
• B) increases by an equal amount.
• C) does not change.
• D) increases by some other amount.

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Definitions:

Riskier Loans

Loans that carry a higher chance of default compared to standard loans, often resulting in higher interest rates to compensate for the increased risk.

Tax-Exempt

A status of financial or material exemption from the requirement to pay taxes granted by government authorities.

Present Value

The now-value of a later financial sum or succession of monetary flows, using a determined rate of return as the basis for calculation.

Interest Rate

This is the percentage of a sum of money charged for its use.