Which of the Following Would Produce the Largest Increase in the Contribution

question 54

Multiple Choice

Which of the following would produce the largest increase in the contribution margin per unit?

• A) A 7% increase in selling price.
• B) A 15% decrease in selling price.
• C) A 14% increase in variable cost.
• D) A 17% decrease in fixed cost.
• E) A 23% increase in the number of units sold.

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Definitions:

Income Taxes

Taxes imposed by the government on the income generated by businesses and individuals.

Net Present Value

A financial metric that calculates the present value of all cash flows (both incoming and outgoing) associated with an investment, adjusted for time and interest.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, indicating the annual return that makes the net present value of all cash flows from a particular project equal to zero.

Cash Flows

The sum of cash flowing in and out of a company, particularly influencing its available cash assets.