If both the variable cost per unit and the selling price per unit decrease, the new contribution margin ratio in relation to the old contribution margin ratio will be:
A) Lower.
B) Higher.
C) Unchanged.
D) Cannot determine with the information given.

Question

Quizplus · Accepted Answer

The contribution margin ratio depends on the specific amounts by which the variable cost and selling price decrease. Without knowing these amounts, we cannot determine the effect on the contribution margin ratio.

If Both the Variable Cost Per Unit and the Selling