Nonesuch Company Sells Only One Product at a Regular Price

question 76

Multiple Choice

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent 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)40%
• B)25%
• C)75%
• D)60%

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Definitions:

Intercalated Discs

Specialized connections between cardiomyocytes, containing gap junctions and desmosomes, facilitating synchronized heart contractions.

Cardiocyte

A muscle cell of the heart, specialized for continuous contractions that pump blood throughout the body.

Gap Junctions

Specialized intercellular connections that facilitate the direct transfer of ions and small molecules between the cytoplasm of adjacent cells.

Desmosomes

Cell structures specialized for cell-to-cell adhesion, acting as anchors between cells in tissues that undergo significant stress.