Question

The contribution margin ratio always increases when the

a. variable costs as a percentage of net sales increase
b. variable costs as a percentage of net sales decrease
c. break-even point increases
d. break-even point decreases

Answer 1

The contribution margin ratio always increases when the variable costs as a percentage of net sales decrease.

Step-by-step explanation:

The contribution margin ratio always increases when the variable costs as a percentage of net sales decrease. When variable costs decrease, the contribution margin ratio increases because it represents the amount of revenue available to cover fixed costs and contribute to profit.