Given a constant sales price, the larger the contribution margin, the:
A) Higher the variable cost per unit as a percentage of the sales price.
B) Higher the cash break-even point.
C) Lower the financial break-even point.
D) Lower the fixed costs as a percentage of the sales price.
E) Lower the gross profit per unit sold.

Question

Quizplus · Accepted Answer

A larger contribution margin indicates that a greater portion of each sale contributes to covering fixed costs and profit, thus lowering the financial break-even point.

Given a Constant Sales Price, the Larger the Contribution Margin