One Way a Company Might Increase Sales Revenue Is to

question 48

Multiple Choice

One way a company might increase sales revenue is to

• A)extend credit to customers that are lower credit risks.
• B)extend credit to customers that are greater credit risks.
• C)extend credit to vendors that are greater credit risks.
• D)fail to write off uncollectible accounts.
• E)reduce bad debt expense.

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Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating the amount each unit contributes to covering fixed costs and generating profit.

Degree of Operating Leverage

A financial ratio that measures the percentage change in operating income in response to a percentage change in sales.

Forecasted Contribution Margin

An estimated metric that indicates the difference between sales revenue and variable costs of goods sold, used to predict the profitability of sales.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and to generate profit.