The total contribution margin decreases if sales volume remains the same and which of the following occurs?
A) Fixed expenses increase.
B) Fixed expenses decrease.
C) Variable expense per unit increases.
D) Variable expense per unit decreases.

Question

Quizplus · Accepted Answer

The total contribution margin is calculated as total sales revenue minus total variable expenses. If the variable expense per unit increases while sales volume remains the same, the total variable expenses will increase, leading to a decrease in the total contribution margin. Fixed expenses do not affect the contribution margin directly since they remain constant regardless of the level of production or sales volume.

The Total Contribution Margin Decreases If Sales Volume Remains the Same