The Contribution Margin Ratio Can Be Used to

question 77

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.

---

Definitions:

Fixed Assets

Long-term assets purchased for operating the business, not expected to be converted to cash within a year.

Investing Activities

Deals that include buying and selling assets with long-term value and investments outside of cash equivalents.

Operating Activities

Business actions related directly to the production and delivery of goods and services, reflected in the cash flow statement.

Investing Activities

Transactions and events that involve the purchase or sale of long-term assets and investments, a component of a company’s cash flow statement.