If Sales Volume Increases and All Other Factors Remain Constant

question 317

Multiple Choice

If sales volume increases and all other factors remain constant, then the:

• A) contribution margin ratio will increase.
• B) break-even point will decrease.
• C) margin of safety will increase.
• D) net operating income will decrease.

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Definitions:

Economic Value

The value that an asset or service provides to its user, often measured in terms of its ability to generate income or save costs.

Value Drivers

Factors that significantly impact the value of a company's products or services, which in turn affect the company's profitability and market value.

Decrease Value

A reduction in the worth or value of an asset or entity.

Staff Motivation

The level of energy, commitment, and creativity that a company's workers bring to their jobs.