The following information pertains to the Dallas Churning Company's three products: $\begin{array}{lrrr}&D&E&F\
\text { Unit sales per month } & 900 & 1,400 & 800 \
\text { Selling price per unit } & \$ 6.00 & \$ 11.25 & \$ 7.50 \
\text { Variable costs per unit } & 3.00 & 9.00 & 7.80 \
\text { Unit contribution margin } & \$ 3.00 & \$ 2.25 & \$(0.30)
\end{array}$ Assume that the selling price of product F is increased to $8.25 with a reduction in monthly sales to 400 units. Monthly profits will
A)increase by $420.
B)decrease by $60.
C)increase by $180.
D)increase by $2,070.

Question

Quizplus · Accepted Answer

The increase in contribution margin per unit for product F is $0.45 ($8.25 - $7.80). The decrease in sales volume is 400 units. Therefore, the total increase in contribution margin is $0.45 x 400 = $180.

The Following Information Pertains to the Dallas Churning Company's Three