Which of the Following Statements Is TRUE If the Sales

question 163

Multiple Choice

Which of the following statements is TRUE if the sales price per unit increases while the variable cost per unit and total fixed costs remain constant?

• A) The contribution margin increases and the break-even point decreases.
• B) The contribution margin decreases and the break-even point decreases.
• C) The contribution margin increases and the break-even point increases.
• D) The contribution margin decreases and the break-even point increases.

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Definitions:

Varying Inventory Levels

Adjusting the amount of stock on hand to meet changing demand conditions or to maximize operational efficiency.

Back Ordering

Refers to the process of accepting and processing orders for currently out-of-stock goods to be fulfilled when the stock is replenished.

Services

Activities or benefits provided to consumers or businesses that do not result in the ownership of tangible goods.

Manufacturing

The process of converting raw materials, components, or parts into finished goods that meet a customer's expectations or specifications.