Assume Only the Specified Parameters Change in a CVP Analysis

question 166

Multiple Choice

Assume only the specified parameters change in a CVP analysis. The contribution margin percentage increases when ________.

• A) total fixed costs increase
• B) total fixed costs decrease
• C) variable costs per unit increase
• D) variable costs per unit decrease

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Definitions:

Authorization

The official permission or power to do something, often formally granted by a higher authority.

Consent

Voluntary agreement or permission for something to happen or agreement to do something.

Earned Surplus Test

A financial measurement to assess a company's ability to pay dividends based on its accumulated, undistributed profits.

Surplus Test

An assessment used in insurance and other financial sectors to evaluate a company's financial stability by comparing its assets to liabilities to ensure it can meet future obligations.