If Selling Price Per Unit and Sales Volume Remain the Same

question 70

Multiple Choice

If selling price per unit and sales volume remain the same while variable costs per unit decrease and total fixed costs decrease, which of the following is false:

• A)Contribution margin ratio will increase.
• B)Contribution margin per unit will increase.
• C)Net operating income will increase.
• D)Net operating income will decrease.

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Definitions:

Marginal Profit

The rise in earnings achieved by selling an extra unit of a product or service.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Competitive

A state of being in which entities vie against each other to achieve a goal, such as market dominance or winning a contest.

Profit-Maximizing

The process or strategy of adjusting operations and resources to achieve the highest possible profit.