If the Fixed Costs for a Product Decrease and the Variable

question 138

Multiple Choice

If the fixed costs for a product decrease and the variable costs (as a percentage of sales dollars) decrease, what will be the effect on the contribution margin ratio and the break-even point, respectively?
$\begin{array}{cc}\text { Contribution Margin Ratio }&\text { Break-even Point }\end{array}$
A. $\begin{array}{cc} &&& \text { Decrease } &&&&&&& \text { Increase } \\\end{array}$
B. $\begin{array}{cc} &&& \text { Increase } &&&&&&& \text { Decrease } \\\end{array}$
C. $\begin{array}{cc}&&& \text { Decrease } &&&&&&& \text { Decrease } \\\end{array}$
D. $\begin{array}{cc}&&& \text { Increase } &&&&&&& \text { Increase } \\\end{array}$

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

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Definitions:

Unemployment Rate

The share of the workforce that's currently not employed but is actively looking for jobs.

Nominal NNP

The Gross National Product measured at current market prices, without adjusting for inflation.

Real NNP

Net National Product adjusted for inflation; measures the value of goods and services produced by a country's economy, less the value of goods and services used up in production, adjusted for price changes.

Price Index

A statistical measurement that tracks changes in the price level of a basket of goods and services over time.