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
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 percent and fixed costs do not change, what are the effect on the contribution margin per unit and the contribution margin ratio?
a). The 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 decreases.
d). The contribution margin per unit increases and the contribution ratio remains unchanged.
Step by Step Solution
3.40 Rating (166 Votes )
There are 3 Steps involved in it
Step: 1
old contribution per unit sales per unitvariable cost per ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started