Assume only the specified parameters change in a cost-volume-profit analysis. If the contribution margin increases by $6 per unit, then ________.
A) fixed costs increases by $6 per unit
B) operating income decreases by $6 per unit
C) fixed costs decreases by $6 per unit
D) operating income increases by $6 per unit

Question

Quizplus · Accepted Answer

An increase in contribution margin means that for each unit sold, there is an increase in the amount of revenue available to cover fixed costs and contribute to operating income. Therefore, if the contribution margin increases by $6 per unit, operating income will also increase by $6 per unit.

Assume Only the Specified Parameters Change in a Cost-Volume-Profit Analysis