During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the
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During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ's:
a. Contribution margin and gross margin will be lower.
b. Contribution margin will be higher, while its gross margin will remain the same.
c. Operating income will be the same under both the financial accounting income statement and contribution income statement.
d. Inventory amounts booked under the financial accounting income statement will be lower than under the contribution income statement.
Contribution MarginContribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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Choice a is incorrect The contribution margin will be lower due to an increase in variable ...View the full answer
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Related Book For 
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
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