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If the Selling Price Per Unit Were to Drop $2

Question 45

Multiple Choice

 Selling price per unit $100 Variable expenses per unit $40 Fixed expenses per month $60,000\begin{array} { ll } \text { Selling price per unit } & \$ 100 \\\text { Variable expenses per unit } & \$ 40 \\\text { Fixed expenses per month } & \$ 60,000\end{array} If the selling price per unit were to drop $2, from $100 to $98, the sales volume were to increase 500 units to 4,500 units per month, and advertising expense were to increase by $1,000:


A) the breakeven point would increase.
B) the breakeven point would decrease.
C) the contribution margin ratio would increase.
D) operating income would decrease.

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