Kumar Produces Large Decorative Tiles Used in Home Decor

question 1

Multiple Choice

Kumar produces large decorative tiles used in home decor.The tiles sell for $700 and the fixed monthly operating costs are as follows:

Kumar's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales,$0.70 went to cover his fixed costs,and that anything past that point was pure profit.
Kumar is planning to increase the selling price to $760.What impact will the increase in selling price have on the contribution margin ratio?

• A)It will stay the same.
• B)It will go up from 70% to 72%.
• C)It will go up from 70% to 79%.
• D)It will go down from 79% to 72%.