If the Return on Assets Is Positive, an Increase in Total

question 30

Multiple Choice

If the return on assets is positive, an increase in total assets will result in

• A)an increase in the return on assets.
• B)a decrease in the return on assets.
• C)no change in the return on assets.
• D)The effect cannot be determined.

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Definitions:

Variable Costs

Costs that change in proportion to the level of activity or production volume.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums, remaining constant regardless of activity levels.

Break-Even Point

The juncture where the cumulative expenses equal total income, yielding neither a profit nor a loss.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, indicating how much revenue contributes towards covering fixed costs and generating profit.