Increasing the selling price and decreasing sales volume will increase profit if:

Question

Quizplus · Accepted Answer

Increasing the selling price while decreasing sales volume will only increase profit if the contribution margin per unit increases. This is because the contribution margin is the amount that each unit sold contributes towards covering fixed costs and generating profit. By increasing the selling price, the contribution margin per unit may increase and offset the decrease in sales volume.

Increasing the Selling Price and Decreasing Sales Volume Will Increase