All Else Constant, as the Variable Cost Per Unit Increases

question 152

Multiple Choice

All else constant, as the variable cost per unit increases, the:

• A) Contribution margin decreases.
• B) Sensitivity to fixed costs decreases.
• C) Degree of operating leverage decreases.
• D) Operating cash flow increases.
• E) Net profit increases.

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Definitions:

Causal Explanations

Statements or analysis that identify reasons or causes for certain phenomena.

Slippery Slope Fallacy

A logical fallacy that assumes a relatively small first step leads to a chain of related events culminating in some significant effect.

Warranted Arguments

Arguments that are justified or backed up by substantial evidence or reason.

False Cause Fallacy

A logical fallacy where a cause-and-effect relationship is incorrectly assumed between two events simply because they occur together.