If the Selling Price Per Unit and the Variable Cost

question 45

Short Answer

If the selling price per unit and the variable cost per unit both increase by 5%, what is the effect on the contribution margin per unit and on the contribution margin ratio?

---

Definitions:

Installment Accounts

Installment accounts are credit accounts where the borrower repays the loan amount plus interest in regular payments over a set period.

Allowance Method

The allowance method is an accounting technique used to account for bad debts by estimating uncollectible accounts and reflecting them as an allowance for doubtful accounts on the balance sheet.

Direct Write-off Method

A method of accounting for bad debts where uncollectible accounts are directly written off against income at the time they are deemed non-collectable.