The Contribution Margin Ratio Always Increases When Which of the Following

question 111

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) Fixed Costs increase.

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Definitions:

Chief Executive Officer

The highest-ranking executive in a company, responsible for making major corporate decisions, managing overall operations, and acting as the main point of communication between the board of directors and corporate operations.

Corporation

A legal entity that is separate and distinct from its owners, capable of conducting business, owning property, and being liable for legal actions.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, making them the owners of the corporation to the extent of the shares they hold.

Sole Proprietorship

A business in which one person (sole proprietor) is in control of the management and profits.