When the actual units sold are lower than what was used to set the original price, why should the unit selling price be increased?
A) Unit variable cost and fixed cost increase because of fewer units.
B) Unit fixed cost and desired ROI per unit increase because of fewer units.
C) Unit variable cost and desired ROI per unit decrease because of fewer units.
D) Only unit fixed cost increases because of fewer units.

Question

Quizplus · Accepted Answer

When fewer units are sold, the fixed costs are spread over fewer units, increasing the unit fixed cost. Additionally, to maintain the desired return on investment (ROI) per unit, the selling price may need to be increased.

When the Actual Units Sold Are Lower Than What Was