What Will Happen to Return on Investment (ROI) If a Company

question 126

Multiple Choice

What will happen to return on investment (ROI) if a company must decrease its selling price while all of the company's expenses remain constant?

• A) ROI will increase.
• B) ROI will decrease.
• C) ROI will not be affected.
• D) We cannot determine the effect from the information provided.

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Definitions:

Controlling Inventory Levels

A strategy used in operations management that aims at maintaining optimal levels of inventory to meet demand while minimizing carrying costs and stockouts.

Variable Costing

An accounting method that only allocates variable costs to inventory, treating fixed costs as period expenses.

Contribution Margin

The amount by which the selling price of an item exceeds its variable costs, contributing towards covering fixed costs and generating profit.

Sales Personnel

Individuals in an organization responsible for selling products or services to customers, often including roles such as sales representatives, sales managers, and sales directors.