If the Variable Cost Per Unit Decreases While the Sales

question 90

Multiple Choice

If the variable cost per unit decreases while the sales price per unit and total fixed costs remain constant, which of the following statements is true?

• A)The contribution margin decreases and the breakeven point increases.
• B)The contribution margin decreases and the breakeven point decreases.
• C)The contribution margin increases and the breakeven point increases.
• D)The contribution margin increases and the breakeven point decreases.

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Definitions:

Conditions

The specific requirements, terms, or circumstances that define an agreement or situation.

Capacity

The maximum output that a business can produce under normal conditions over a certain period of time.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the physical factors of production including machinery and buildings.

Character

In finance, character often refers to one of the "Three Cs" (character, capacity, collateral) used to assess a borrower's creditworthiness, focusing on their reputation for repaying debts.