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

---

Definitions:

Production Location

The geographical site where goods or services are produced, influenced by factors such as cost, access to markets, and regulations.

Weight and Volume

Measurements that describe the mass and spatial dimensions of an object, critical in numerous fields such as shipping, engineering, and cooking.

Supply Chain

The network of organizations, people, activities, information, and resources involved in creating a product from supplier to consumer.

Data Analytics

The process of examining, cleaning, transforming, and modeling data with the goal of discovering useful information, informing conclusions, and supporting decision-making.