Which of the Following Statements Is TRUE If the Variable

question 91

Multiple Choice

Which of the following statements is TRUE if the variable cost per unit decreases while the sales price per unit and total fixed costs remain constant?

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

Unit Product Cost

The sum of materials, labor, and overhead expenses divided by the quantity of units manufactured.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated before the production process begins.

Job-Order Costing

An accounting methodology used to assign costs to specific jobs or batches, enabling the calculation of profitability per job.

Machine-Hours

A measure of production time, calculated by multiplying the number of machines by the hours they are in operation.