The Contribution Margin Ratio Can Be Used to

question 3

Multiple Choice

The contribution margin ratio can be used to

• A)Determine the increase in profits from a given dollar increase in sales revenue.
• B)Determine the impact of fixed costs on contribution margin.
• C)Both to determine the increase in profits from a given dollar increase in sales revenue and to determine the impact of fixed costs on contribution margin.
• D)Neither to determine the increase in profits from a given dollar increase in sales revenue nor to determine the impact of fixed costs on contribution margin.

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Definitions:

Insurance

A financial product sold by insurance companies to protect individuals and businesses against potential future losses in return for a premium.

Low Risk

Low risk describes investments or decisions that have a minimal chance of losing value or causing harm.

Insurance With Deductibles

A type of insurance policy where the policyholder is required to pay a specified amount of loss before the insurance coverage begins paying out.

Low-Risk Individuals

People who are considered to have a lower probability of experiencing adverse events or making claims, often used in the context of insurance underwriting and premium setting.