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Tower Company Manufactures and Sells a Single Product with a Positive

Question 67

Multiple Choice

Tower Company manufactures and sells a single product with a positive contribution margin. If the selling price and the variable cost per unit both increase 5% and fixed costs do not change, what is the effect on the contribution margin per unit and the contribution margin ratio?
 Contribution margin per unit  Contribution margin ratio \begin{array} { cc} & \text { Contribution margin per unit } & \text { Contribution margin ratio } \\\end{array}
A.  No change  No change \begin{array} { cc} &&&&& \text { No change } &&&&&&& \text { No change } \\\end{array}
B.  Increase  Increase \begin{array} { cc} &&&&& \text { Increase } &&&&&&&& \text { Increase } \\\end{array}
C.  Increase  No change \begin{array} { cc} &&&&& \text { Increase } &&&&&&&& \text { No change } \\\end{array}
D.  Increase  Decrease \begin{array} { cc} &&&&&\text { Increase } &&&&&&&& \text { Decrease } \\\end{array}


A) Option A
B) Option B
C) Option C
D) Option D

Correct Answer:

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