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:

Excess Reserves

The reserves held by banks over and above the minimum required by the central bank, available for lending or investment.

Money Supply

The total financial resources existing in an economy at a certain time.

Open Market Operations

These are financial activities where central banks buy or sell government securities in the open market to control the money supply and influence interest rates.

Required Reserve Ratio

The fraction of deposits that a bank is mandated by regulations to hold in reserve and not loan out.