The Greater the Ratio of Variable Costs to Sales, The

question 105

Multiple Choice

The greater the ratio of variable costs to sales, the:

• A)more each additional sale contributes to coverage of fixed costs.
• B)lower the level of profitability.
• C)more units must be sold to cover fixed costs.
• D)lower the benefit of conducting a sensitivity analysis.

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Definitions:

Proxy Statement

A document containing the information that companies are required to provide to shareholders that enables them to make informed decisions about matters that will be discussed at an annual or special shareholder meeting.

Investment Evaluation

The process of assessing the performance and potential of investment opportunities to inform financial decisions.

Sarbanes-Oxley Act

A U.S. law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to securities laws.

Proxy Statements

Documents containing the information that companies are required to provide to shareholders to solicit proxy votes, including details on matters to be voted on at shareholder meetings.