Assume That Only the Specified Parameters (That Is, Variables) Change

question 69

Multiple Choice

Assume that only the specified parameters (that is, variables) change in a sensitivity analysis. The contribution margin ratio increases when:

• A) Total short-term fixed costs increase.
• B) Total short-term fixed costs decrease.
• C) The variable cost per unit increases.
• D) The variable cost per unit decreases.
• E) Sales volume increases.

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Definitions:

Dollars

The currency unit used in the United States, representing a standard measure of value.

Consumer Price Index

An index that measures the average change over time in the prices paid by consumers for a market basket of consumer goods and services.

Money Demand

The desire to hold cash or easily liquidated assets based on the trade-off between the liquidity they provide and the interest foregone by not investing.

Inflation

The speed at which the overall price level of goods and services increases, leading to a decline in the currency's buying power.