If a company increases the price of its product by 10% with no change in sales volume

Question

Quizplus · Accepted Answer

Since sales volume remains constant, the revenue will increase by 10%. However, the variable costs per unit sold will also increase by 10%. Therefore, the contribution margin per unit will change as well, but the total contribution margin will remain the same. Fixed costs are not affected by changes in sales volume or price, so choice D is incorrect.

If a Company Increases the Price of Its Product by 10