Assume there is a reduction in the selling price and all other CVP parameters remain constant.This change will:

Question

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A reduction in the selling price, while keeping all other cost-volume-profit (CVP) parameters constant (including fixed costs, variable costs per unit, and the number of units sold), will reduce the operating profit. This is because the contribution margin per unit (selling price minus variable cost per unit) will decrease, leading to a lower total contribution margin and, consequently, a lower operating profit if all else remains unchanged.

Assume There Is a Reduction in the Selling Price and All