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The contribution margin ratio decreases if Multiple Choice The percentage of contribution margin to sales revenue...

The contribution margin ratio decreases if

Multiple Choice

  • The percentage of contribution margin to sales revenue increases.

  • The percentage of variable cost to sales revenue increases.

  • The percentage of variable cost to sales revenue decreases.

  • Total fixed costs decrease.

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Answer #1

Answer: ii) The percentage of variable cost to sales revenue increases.

Explanation:

  • The percentage of contribution margin to sales revenue increases, then the contribution margin ratio increases.
  • The percentage of variable cost to sales revenue increases, then the contribution margin ratio decreases.
  • The percentage of variable cost to sales revenue decreases, then the contribution margin ratio increases.
  • Total fixed costs decreases, then the contribution margin ratio is no change.

Thus, the option ii) is correct answer and remaining given statements are incorrect.

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