Question 2 A. Sharjah Company manufactures and sells a single product with a positive contribution margin. If the selling price and the variable expense per unit both increase by 5% and fixed expenses do not change, what is the effect on the contribution margin per unit and the contribution margin ratio? Explain your answer by providing a numerical example. B. Dubai Company has reported the following budget data: Sales....... Selling price.. Variable expense.... Fixed manufacturing expenses .150,000 units ..$25 per unit $15 per unit .$800,000 Fixed selling and administrative expenses $700,000 An advertising agency claims that an advertising campaign would enable the company to increase its sales by 20%. What is the maximum amount that the company can pay for advertising and obtain a net operating income of $200,000? Explain your answer.