The Contribution Margin Ratio Always Increases When Which of the Following

question 69

Multiple Choice

The contribution margin ratio always increases when which of the following occurs?

• A) Variable expenses as a percentage of sales increase.
• B) Variable expenses as a percentage of sales decrease.
• C) Break-even point increases.
• D) Break-even point decreases.

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Definitions:

Historical Cost

The original monetary value of an asset or expense as recorded at the time of acquisition or incurrence, without adjusting for inflation or changes in value.

Fair Value

An estimate of the price at which an asset or liability could be traded in a fair transaction between willing parties, not involving forced sale or liquidation.

Weighted Average

A mathematical calculation that takes into account both the magnitude and the significance of each number in a set to find an average value weighted by importance or size.

Homogeneous Products

Goods that are considered identical by consumers, and can be substituted for one another, such as commodities.