How Will a Company's Contribution Margin Be Affected by an Investment

question 33

Multiple Choice

How will a company's contribution margin be affected by an investment in equipment that increases fixed costs in order to achieve a reduction in direct labor cost?

• A)Contribution margin will increase.
• B)Contribution margin will fall.
• C)Contribution margin will either increase or decrease depending on the relative magnitudes of the changes in fixed and variable costs.
• D)Contribution margin will remain the same.

---

Definitions:

Self-concept

An individual's perception of themselves, consisting of beliefs, feelings, and thoughts about one's identity and personal worth.

Attitude Formation

The process through which individuals develop their views and opinions about something.

Learning

The process of acquiring new understanding, knowledge, behaviors, skills, values, or preferences.

Motivation

The internal drive or external stimulus that prompts an individual to act or behave in a certain manner towards achieving a goal.