Tower Company Manufactures and Sells a Single Product with a Positive

question 135

Multiple Choice

Tower Company manufactures and sells a single product with a positive contribution margin. If the selling price and the variable cost per unit both increase 5% and fixed costs do not change, what is the effect on the contribution margin per unit and the contribution margin ratio?
$\begin{array} { cc} & \text { Contribution margin per unit } & \text { Contribution margin ratio } \\\end{array}$
A. $\begin{array} { cc} &&&&& \text { No change } &&&&&&& \text { No change } \\\end{array}$
B. $\begin{array} { cc} &&&&& \text { Increase } &&&&&&&& \text { Increase } \\\end{array}$
C. $\begin{array} { cc} &&&&& \text { Increase } &&&&&&&& \text { No change } \\\end{array}$
D. $\begin{array} { cc} &&&&&\text { Increase } &&&&&&&& \text { Decrease } \\\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

UCC

The Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States, including sales, leases, negotiable instruments, and secured transactions.

Confession of Judgment

An agreement where a debtor allows a creditor to obtain a judgment against them without a trial.

Power of Attorney

A legal document authorizing one person to act on behalf of another in legal or financial matters.

Commerce Treaty

An international agreement between countries that regulates aspects of trade among them, possibly including tariffs, import and export quotas, and other trade restrictions.