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:

Cabinet Post

A position of leadership within the executive branch of a government, typically overseeing a specific department or agency and serving as an advisor to the head of state.

Missouri Controversy

A political conflict that erupted in 1819 during the application process of Missouri for statehood, highlighting the sectional tensions over slavery in the United States.

Three-Fifths Clause

The provision in the U.S. Constitution that stipulated that for purposes of apportionment of congressional seats and taxes, three out of every five slaves would be counted as persons.

Sectional Divide

The growing political, economic, and social differences and tensions between the northern and southern states of the United States, especially over issues like slavery, leading up to the Civil War.