If the Fixed Costs for a Product Increase and the Variable

question 97

Multiple Choice

If the fixed costs for a product increase and the variable costs (as a percentage of sales dollars) increase,what will be the effect on the contribution margin ratio and the break-even point,respectively? $$\begin{array} { | c | c | c | } \hline & \text { Contribution Margin Ratio } & \text { Break-eren Point } \\\hline \text { A. } & \text { Decrease } & \text { Increase } \\\hline \text { B. } & \text { Increase } & \text { Decrease } \\\hline \text { C. } & \text { Decrease } & \text { Decrease } \\\hline \text { D. } & \text { Increase } & \text { Increase } \\\hline\end{array}$$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Tax

Compulsory contributions made to government revenues, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.

Per-unit Burden

The tax cost to a buyer or a seller for each unit of a good or service, often used to analyze the effect of taxes on market equilibrium.

Tax

A financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Consumer Surplus

The shortfall between the total consumers are willing to contribute towards a good or service and the actual contribution.