Zeke Company Sells 25,000 Units at $21 Per Unit

question 19

Multiple Choice

Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000. The contribution margin ratio and the unit contribution margin are:

• A) 47% and $11 per unit
• B) 53% and $7 per unit
• C) 47% and $8 per unit
• D) 52% and $11 per unit

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Definitions:

Law of Diminishing Marginal Utility

An economic principle stating that as consumption of a good or service increases, the marginal utility derived from each additional unit decreases.

Marginal Utility

Marginal Utility is the added satisfaction or benefit a consumer receives from consuming one more unit of a good or service.

Diminishing Marginal Utility

The principle that the utility or satisfaction gained by consuming each additional unit of a good or service decreases as more of that good or service is consumed.

Marginal Utility

The extra pleasure or benefit derived from consuming an additional unit of a product or service.