If the Sales Price Per Unit Increases While the Variable

question 63

Multiple Choice

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

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

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Definitions:

March Put

An options contract which grants the holder the right to sell a specific financial instrument at a predetermined price before or at a specified date in March.

Underlying Stock

Refers to the specific security or asset on which a derivative instrument, such as an option or future, is based.

March 30 Call Option

A financial derivative that gives the holder the right, but not the obligation, to buy an asset at a specified price on or before March 30.

Intrinsic Value

The actual, fundamental value of an asset, investment, or company, based on underlying perception of its true value including all aspects of the business.