All else being equal, which of the following would cause net operating income to increase?

Question

Quizplus · Accepted Answer

Decreasing total fixed costs will increase net operating income because it will reduce the expenses and increase the profit margin for each unit sold. A decrease in sales price per unit (choice C) or contribution margin (choice D) will lower net operating income. An increase in total variable costs (choice A) will either lower net operating income or require an increase in sales price or volume to maintain the same level of income.

All Else Being Equal, Which of the Following Would Cause