If Sales Price and the Unit Variable Cost Remain Constant

question 85

Multiple Choice

If sales price and the unit variable cost remain constant and fixed costs decrease, contribution margin will

• A)increase.
• B)decrease.
• C)remain the same.
• D)vary, depending on the circumstances.

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Definitions:

Depreciation

The methodical distribution of a physical asset's cost across its lifespan.

Manufacturing Equipment

Assets used in the process of producing goods, including machinery, tools, and other apparatus necessary for the manufacturing process.

Raw Materials Inventory

The total cost of all component materials currently in stock that have not yet been used in work-in-process or finished goods production.

Overapplied

Refers to a situation where the allocated costs exceed the actual overhead expenses incurred.