What Ratio Indicates the Percentage of Each Sales Dollar That

question 113

Multiple Choice

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

• A) margin of safety ratio
• B) contribution margin ratio
• C) costs and expenses ratio
• D) profit ratio

Understand the assumptions underlying CVP analysis and their implications.

Apply sensitivity analysis to assess changes in assumptions.

Understand the concept and calculation of operating leverage.

Distinguish between fixed and variable costs and their roles in CVP analysis.

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Definitions:

Chi-square Value

A statistic used to measure how expectations compare to actual observed data, often used in hypothesis testing.

One-tailed Test

A statistical test in which the region of rejection is on only one side of the sampling distribution, used when testing a directional hypothesis.

Chi-square Value

A statistical measure used in the chi-square test to compare observed data with data expected to be obtained under a specific hypothesis.