Brasher Company Manufactures and Sells a Single Product That Has

question 124

Multiple Choice

Brasher Company manufactures and sells a single product that has a positive contribution margin.If the selling price and variable expenses both decrease by 5% and fixed expenses do not change,then what would be the effect on the contribution margin per unit and the contribution margin ratio?
$\begin{array}{|l|l|l|}\hline & \begin{array}{l}\text { Contribution margin per } \\\text { unit }\end{array} & \text { Contribution margin ratio } \\\hline \text { A) } & \text { Decrease } & \text { Decrease } \\\hline \text { B) } & \text { Decrease } & \text { No change } \\\hline \text { C) } & \text { No change } & \text { Decrease } \\\hline \text { D) } & \text { No change } & \text { No change } \\\hline\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Indeterminate

A condition or situation that lacks a clear or definite resolution or outcome.

Marginal Utility

The supplementary utility or satisfaction derived by a consumer from the consumption of one more unit of a product or service.

Entire Budget

The total estimated expenditure of an individual, organization, or government for a defined period.

Utility Maximizing

A principle in economics where individuals or firms aim to achieve the highest level of satisfaction or profit from their consumption or production decisions, subject to their resources and constraints.