Exhibit 16-1 -Referring to Exhibit 16-1, an Increase in the Price Level

question 116

Multiple Choice

Exhibit 16-1
-Referring to Exhibit 16-1, an increase in the price level will cause a move from

• A)B to A
• B)A to B
• C)D_M to D_M'
• D)D_M to D_M*
• E)E to F

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses are subtracted, contributing towards covering fixed costs and profit.

Variable Selling Expenses

Costs that fluctuate with the level of sales, such as commissions or shipping fees.

Variable Administrative Expenses

Expenses that vary with the level of business activity, such as sales commissions or supply costs.

Fixed Selling Expenses

Costs associated with selling that do not change with sales volume, including salaries of sales staff and advertising expenses.