Complete the Statement,using the Following Terms: Increases,decreases,or Have No Effect

question 13

Short Answer

Complete the statement,using the following terms: increases,decreases,or have no effect on.
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Decreases in fixed cost ________ contribution margin per unit and ________ the breakeven point.

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Definitions:

Variable Cost

Costs that vary in direct proportion to changes in the level of production or sales volume.

Fixed Cost

Fixed expenditures, including rent, salaries, and insurance, that are unaffected by changes in production or sales volumes.

Contribution Margin Ratio

A measure indicating the percentage of each sales dollar that contributes to covering fixed costs and generating profit, calculated as (Sales Revenue - Variable Costs) / Sales Revenue.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums, providing predictability in budgeting.