In a volatile business environment, it is preferable to structure a business with operating costs made up primarily of

Select one:

A$.$

fixed costs

B$.$

step costs

C$.$

mixed costs

D$.$

variable costs

Net operating income will decrease.

C$.$

Break$-$even point will decrease.

D$.$

Contribution margin ratio will increase.

A$.$

reduce the break$-$even sales volume by $20$ percent.

B$.$

not affect the break$-$even sales volume if there is an offsetting $20$ percent increase in fixed costs.

C$.$

reduce the slope of the total costs line by $20$ percent.

D$.$

reduce total costs by $20$ percent.

Total

Contribution margin ratio:

Break$-$even sales volume:

$($b$.)$ Determine TPG$\text{'}$s margin of safety in sales dollars. Hint: Use weighted average billing rate.$$

$Answer $11$