If the Contribution Margin Is Not Sufficient to Cover Fixed

question 235

Multiple Choice

If the contribution margin is not sufficient to cover fixed expenses:

• A) total profit equals total expenses.
• B) contribution margin is negative.
• C) a loss occurs.
• D) variable expenses equal contribution margin.

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Definitions:

Cost Of Capital

The necessary rate of return to consider a capital expenditure project, like the development of a new factory, as viable.

Risk Profile

An evaluation of an individual's or organization's willingness to take risks, as well as their financial ability to manage the impact of those risks.

Incremental

Describing something as increasing or adding on, often in small or gradual steps.

Risk Analysis

The process of identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.