East Company manufactures and sells a single product with a positive contribution margin. If the selling price and the variable expense per unit both increase 5% and fixed expenses do not change, what is the effect on the contribution margin per unit and the contribution margin ratio? 8. Contribution Contribution margin per unit margin ratio No change Increase Increase Increase No change Increase A) B) C) D) No change Decrease A. Option D B. Option A C. Option B X D. Option C
East Company manufactures and sells a single product with a positive contribution margin. If the selling price and the variable expense per unit both increase 5% and fixed expenses do not change, what is the effect on the contribution margin per unit and the contribution margin ratio? 8. Contribution Contribution margin per unit margin ratio No change Increase Increase Increase No change Increase A) B) C) D) No change Decrease A. Option D B. Option A C. Option B X D. Option C
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:East Company manufactures and sells a single product with a positive contribution margin. If the selling
price and the variable expense per unit both increase 5% and fixed expenses do not change, what is the
effect on the contribution margin per unit and the contribution margin ratio?
8.
Contribution Contribution
margin per unit margin ratio
No change
Increase
Increase
Increase
No change
Increase
A)
B)
C)
D)
No change
Decrease
A. Option D
B. Option A
C. Option B X
D. Option C
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