A Major Benefit of Using a Contribution Ratio Format Is

question 17

Multiple Choice

A major benefit of using a contribution ratio format is that

• A)it supports management's decision on its sales mix.
• B)it assists in determining the effect of sales on operating income.
• C)variable costs are isolated and can be easily reduced.
• D)it shows the impact of fixed costs on the sales mix.

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Definitions:

Perfectly Inelastic

A situation where the demand for a product does not change in response to a change in price.

Excise Tax

A tax levied on specific goods, services, or transactions, often based on quantity purchased rather than value, such as taxes on cigarettes, alcohol, and fuel.

Excise Tax

A tax imposed on specific goods or services at purchase such as gasoline, tobacco, and alcohol.

Highly Inelastic

Describes a situation where the demand or supply for a good or service is hardly affected when the price changes.