If the fixed costs for a product decrease 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?

Question

Quizplus · Accepted Answer

When fixed costs decrease and variable costs decrease as a percentage of sales, the contribution margin ratio will increase. This is because more of each sales dollar will be contributing to covering fixed costs and generating profit. The break-even point will decrease because the higher contribution margin ratio means that fewer sales dollars are required to cover fixed costs and reach the break-even point. Therefore, Option B is the correct answer.

If the Fixed Costs for a Product Decrease and the Variable