There Is an Important Relationship Between Contribution Margin and Profit

question 118

Multiple Choice

There is an important relationship between contribution margin and profit.Which of the following statements is not true?

• A)As the number of units sold increases, total contribution margin increases, but fixed costs remain the same.
• B)As the number of units sold rises, profit increases by the additional contribution margin per unit.
• C)As the number of units sold increases, total contribution margin and fixed costs increase.
• D)As the number of units sold decreases, total contribution margin decreases, but fixed costs remain the same.

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Definitions:

Request for Quotation (RFQ)

A document issued by a buyer to suppliers, inviting them to submit a bid specifying the pricing and terms under which they would commit to sell a product or service.

Strategic Purchase

The acquisition of goods or services with a long-term perspective, considering factors such as cost, quality, and supplier relationships for competitive advantage.

Supply Department

The division within an organization responsible for managing the procurement and supply of goods and services.

Offshore Suppliers

Businesses located in another country that provide goods or services to companies, often to leverage cost advantages.