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:

Relevant Cost

refers to the costs that will be affected by a decision in the future and, thus, should be considered in decision-making processes.

Discounted Price

A reduced price offered on goods or services, usually for a limited time or under certain conditions.

Joint Product

Products that are generated simultaneously during the same manufacturing process but are of equal importance and value.

Common Input

A shared resource or material used in the production or manufacturing process across multiple products or services.