Which one of these combinations must increase the contribution margin?
A) Increasing both the sales price and the variable cost per unit
B) Increasing the sales quantity and increasing the variable cost per unit
C) Decreasing the sales price and increasing the sales quantity
D) Decreasing both fixed costs and depreciation expense
E) Increasing the sales price and decreasing the variable cost per unit

Question

Quizplus · Accepted Answer

Increasing the sales price and decreasing the variable cost per unit will increase the contribution margin because it increases revenue and reduces costs. The other options all involve increasing one cost or decreasing one revenue, which would decrease the contribution margin.

Which One of These Combinations Must Increase the Contribution Margin