If a company sells a single product and the selling price per unit and the variable cost per unit both increase by 5% while fixed costs remain the same, then contribution margin

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The contribution margin per unit increases because the selling price per unit increases by a higher percentage than the variable cost per unit (both increase by 5%, but the selling price is higher, so the absolute increase in revenue per unit is greater than the absolute increase in cost per unit). The breakeven in units decreases because each unit sold contributes more towards covering fixed costs, so fewer units need to be sold to cover the same fixed costs.

If a Company Sells a Single Product and the Selling