All Other Things the Same, Which of the Following Would $\begin{array}{cc} & \text { Contribution Margin } & \text { Variable Costs } \\\end{array}$

question 89

Multiple Choice

All other things the same, which of the following would be true of the contribution margin and variable costs of a company with high fixed costs and low variable costs as compared to a company with low fixed costs and high variable costs?
$\begin{array}{cc} & \text { Contribution Margin } & \text { Variable Costs } \\\end{array}$
A. $\begin{array}{cc}&&& \text { Higher } &&&&&& \text { Higher } \\\end{array}$
B. $\begin{array}{cc}&&& \text { Lower } &&&&&& \text { Higher } \\\end{array}$
C. $\begin{array}{cc} &&&\text { Higher }&&&&&& \text { Lower } \\\end{array}$
D. $\begin{array}{cc} &&& \text { Lower } &&&&&& \text { Lower } \\\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Expense Recognition

Expense Recognition is an accounting principle that dictates the specific conditions under which expenses are recognized and reported in financial statements.

Revenue Recognition

The accounting principle dictating how and when revenue is recognized on the financial statements, ensuring it reflects the transfer of promised goods or services to customers.

Guaranteed Salvage Value

The minimum value for which an asset can be sold at the end of its useful life, as guaranteed by a contract or agreement.

Depreciation Expense

The allocated portion of the cost of a fixed asset over its useful life, recognized as an expense on the income statement.