Question
Griggs Company produces a single product with a current selling price of $170. Variable costs are $130 per unit, and fixed costs per month average
Griggs Company produces a single product with a current selling price of $170. Variable costs are $130 per unit, and fixed costs per month average $6,240. Management is considering increasing the selling price to a proposed $190 per unit. Assume that the variable cost per unit of the product and monthly fixed expenses will not change as a result of the proposed increase in selling price.
Hint: Treat each situation (current and proposed price) as separate potential scenarios when evaluating each question.
At the current selling price of $170 per unit, the contribution margin ratio is approximately:
Multiple Choice
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21.3%.
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76.4%.
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23.5%.
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34.7%.
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