Bauer Company's sales increased, but its pre-tax profits did not change. If the increase was within the relevant range, which of the following statements is true?

Question

Quizplus · Accepted Answer

If Bauer's sales increased but pre-tax profits did not change, it implies that the contribution margin is zero, meaning that the additional sales did not contribute to covering fixed costs or generating profit.

Bauer Company's Sales Increased, but Its Pre-Tax Profits Did Not