Assuming a company has a positive contribution margin, which of the following changes will cause net operating income to increase?

Question

Quizplus · Accepted Answer

A decrease in variable costs will increase the contribution margin per unit, which will increase the net operating income, assuming all other factors remain constant. A decrease in sale price, an increase in total fixed costs, or a decrease in sales volume would decrease the contribution margin and therefore decrease net operating income.

Assuming a Company Has a Positive Contribution Margin, Which of the Following