Assuming That the Fixed Cost Do Not Change, with the Sale

question 44

Multiple Choice

Assuming that the fixed cost do not change, with the sale of each additional unit (above the break-even point) , net operating income will increase by the ____.

• A) contribution margin ratio
• B) contribution margin per unit
• C) sales price per unit
• D) fixed cost per unit

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Definitions:

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and taxes.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, providing a more useful comparison to actual costs.

Variable Costs

Expenses that fluctuate directly with changes in production volume or activity level, such as raw materials and direct labor costs.

Flexible Budgets

Budgets that can adjust or flex for changes in the volume of activity or other relevant factors, allowing for more accurate forecasts and analysis.