Which of the Following Statements Is True When Making Decisions

question 89

Multiple Choice

Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis?

• A) As long as the contribution margin is a positive number, net operating income will be positive.
• B) As long as variable costs are more than fixed costs, net operating income will be negative.
• C) As long as the contribution margin is greater than fixed costs, net operating income will be positive.
• D) As long as the sales price per unit is greater than fixed costs per unit, net operating income will be positive.

---

Definitions:

Required Return

The minimum profit or yield that investors expect to receive on an investment, considering the associated risks.

Target Costing

Target costing involves setting a planned cost for a product and then designing the product’s development cycle to meet this cost to maintain profitability.

Desired Return

The target profit or return a company aims to achieve on investment or sales.

Selling Price

The price of a good or service is established based on considerations like the cost of production, the level of demand in the market, and the presence of competitive products or services.