The contribution margin per unit is the difference between the selling price and the variable cost per
Question:
The contribution margin per unit is the difference between the selling price and the variable cost per unit, and the contribution margin ratio is the ratio of the contribution margin to the selling price per unit. If the selling price and the variable cost per unit both increase \(10 \%\) and fixed costs do not change, what is the effect on the contribution margin per unit and the contribution margin ratio?
(a) Contribution margin per unit and the contribution margin ratio both remain unchanged.
(b) Contribution margin per unit and the contribution margin ratio both increase.
(c) Contribution margin per unit increases and the contribution margin ratio remains unchanged.
(d) Contribution margin per unit increases and the contribution margin ratio decreases.
Step by Step Answer:
Cost Accounting For Managerial Planning Decision Making And Control
ISBN: 9781516551705
6th Edition
Authors: Woody Liao, Andrew Schiff, Stacy Kline