If sales volume increases and all other factors remain constant then the:

If sales volume increases and all other factors remain constant, then the: Multiple Choice margin of safety will increase. break-even point will decrease. net operating income will decrease. contribution margin ratio will increase.

Answer

The correct answer is Margin of Safet will increase. This is because Margin of Safety =( Actual Sales – Break Even Sales )/ Actual Sales

When the Sales Volume increases the Actual Sales would increas but the Breakeven sales would remain the same. this is because the Contribution margin ratio and the fixed cost would remain the same. Hence, the Margin of safety would increase due to increase in sales volume.


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