If the Fixed Costs for a Product Decrease and the Variable

question 4

Multiple Choice

If the fixed costs for a product decrease and the variable costs (as a percentage of sales dollars) decrease,what will be the effect on the contribution margin ratio and the break-even point,respectively?

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

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Definitions:

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service versus what they actually receive, indicating the benefit to producers.

Market Price

The current price at which a good or service can be bought or sold in the market.

Costs Of Production

The expenses incurred in manufacturing a product or providing a service, which may include raw materials, labor, overhead, and any other costs directly tied to the production process.

Basketball

A team sport in which two teams, typically of five players each, opposing one another on a rectangular court, compete with the primary objective of shooting a basketball through the defender's hoop.