Dirth Company Sells Only One Product at a Regular Price

question 68

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) 75%
• D) 60%

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Definitions:

Money Supply

The grand total of economic monetary resources available at a specific time frame.

Gross Domestic Product

The total market value of all final goods and services produced within a country in a given period.

Money Supply

The aggregate quantity of all forms of money, including cash and bank deposits, circulating within an economy.

Interest Rates

The cost of borrowing money or the return on investment, typically expressed as a percentage.