Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 41

For the following questions, circle the best response. Answers are at the end of this chapter.

If both the fixed costs associated with a product 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. Decrease, increase.

b. Increase, decrease.

c. Decrease, decrease.

d. Increase, increase.