Suppose the selling price per unit increased from $5.00 to $6.00 per ticket. What effect would this have on the cost volume profit analysis?

Question

Quizplus · Accepted Answer

The contribution margin would increase because it is calculated as the selling price per unit minus the variable cost per unit. With a higher selling price, the difference between the selling price and the variable cost (assuming it remains constant) would be greater, thus increasing the contribution margin. Additionally, with a higher contribution margin, fewer units would need to be sold to cover fixed costs, leading to a decrease in the break-even point in units.

Suppose the Selling Price Per Unit Increased from $5