Question
1. Which of the following statements is NOT true? A. Cost structure is defined as the relative proportion of fixed and variable costs in an
1.
Which of the following statements is NOT true?
A. Cost structure is defined as the relative proportion of fixed and variable costs in an organization.
B. The contribution margin ratio always increases when variable costs as a percent of sales decrease.
C. If the company increases the proportion of fixed costs relative to variable costs in its cost structure, they will enjoy greater profit in the good years.
D. If the company increases the proportion of variable costs relative to fixed costs, their profit will be more volatile than their profit based on the existing cost structure.
E. Cost structure affects the operating leverage.
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