Dirth Company Sells Only One Product at a Regular Price

question 64

Multiple Choice

Dirth 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)25%
• B)40%
• C)60%
• D)75%

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