Brasher Company manufactures and sells a single product that has a positive contribution margin.If the selling price and variable expenses both decrease by 5% and fixed expenses do not change,then what would be the effect on the contribution margin per unit and the contribution margin ratio?

Question

Quizplus · Accepted Answer

If the selling price and variable expenses both decrease by 5%, the contribution margin per unit and contribution margin ratio will remain the same since the percentage change in both selling price and variable expenses are the same. Therefore, the fixed expenses will still be covered by the contribution margin, and there will be no effect on overall profitability. Option B is the correct answer as it reflects this outcome.

Brasher Company Manufactures and Sells a Single Product That Has