There Is an Important Relation Between Contribution Margin and Profit

question 120

Multiple Choice

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

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

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Definitions:

Secured Bonds

Bonds that have specific assets of the issuer pledged as collateral.

Collateral

An asset pledged by a borrower to secure a loan or other credit, and subject to seizure if the loan is not repaid according to the agreed terms.

Specific Assets

Assets identified and itemized separately for accounting, legal, or financial purposes.

Market Price

The prevailing market rate at which one can purchase or sell an asset or service.