Dirth Company Sells Only One Product at a Regular Price

question 14

Multiple Choice

Dirth Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60% of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What is the contribution margin ratio when the selling price is reduced to $6 per unit?

• A) 25%
• B) 40%
• C) 75%
• D) 60%

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Definitions:

Statute of Limitations

A law prescribing the maximum period within which legal action can be taken for alleged offenses or rights violations.

Deadly Force

The use of force that is likely to cause death or serious bodily harm, often discussed in the context of self-defense or law enforcement.

Actus Reus

Latin for "guilty act," the physical act of committing a crime, as opposed to the mental intent (mens rea) to commit the act.

Duty to Retreat

The legal obligation in some jurisdictions to attempt to avoid conflict by retreating from an aggressor if safely possible, before responding with force.