Wendall Company Sells Only One Product at a Regular Price

question 81

Multiple Choice

Wendall Company sells only one product at a regular price of $7.50 per unit.Variable expenses are 60% of sales,and fixed expenses are $30,000.Management has decided to decrease the selling price to $6 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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Definitions:

Teardrop-Shaped Hills

Elongated hills formed by the erosion of underlying soft rock covered by a harder rock cap, often found in arid climates.

Hanging Valley

A glacial valley whose mouth is higher than the bottom of a larger glacially carved valley it joins.

Depression

A geological term describing a sunken area or a hollow on the surface of the Earth.

Valley

A valley situated between hills or mountains, often hosting a flowing river or stream.