When Will the Contribution Margin Ratio Increase

question 55

Multiple Choice

When will the contribution margin ratio increase?

• A)when the break-even point increases.
• B)when the break-even point decreases.
• C)when the variable expenses as a percentage of sales decrease.
• D)when the variable expenses as a percentage of sales increase.

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Definitions:

Permanent Earnings

The portion of a company's income considered to be sustainable and repeatable, excluding one-time events or accounting anomalies.

Continuing Operations

Parts of a business expected to continue operating and contributing to earnings over the long term, excluding any discontinued operations.

Discount Rate

The interest rate used to discount future cash flows of an investment to their present value, thereby assessing its attractiveness.

Financial Attribute

Characteristics or features of a financial nature that can be used to analyze or assess the financial position or performance of an entity.