1. If fixed costs increase, unit product variable costs increase and unit sales price stays the same, what will be the effect on the contribution margin ratio and the break-even point, respectively? A. B. C. D. Contribution Margin Ratio Increased Decreased Decreased Increased Break-even Point Increased Increased Decreased Decreased 2. High operating leverage represents increased risk associated with relatively: a. High variable costs in the firm's cost structure b. High fixed cost in the firm's cost structure C. High sales revenue combined with high variable costs d. High asset turnover a. 3. In developing a master budget for a manufacturing company, which one of the following items should be done first? Development of a sales budget b. Development of the capital budget C. Determination of manufacturing capacity d. Preparation of a pro forma income statement