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What Effect Will Each of the Following Have on a Product's

Question 50

Essay

What effect will each of the following have on a product's unit contribution margin? In each case, assume that all other variables remain unchanged.
a. The business raises the selling price of the product.
b. The prices of some raw materials used in manufacturing decrease.
c. The local regional government increases the business's property tax.
d. The company's president is given a raise.
e. The production workers receive a raise in their hourly rate.

Correct Answer:

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a. Since CM = S - VC, CM will increase i...

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