Noel & Vang Company Sells Only One Product at a Regular

question 141

Multiple Choice

Noel & Vang Company sells only one product at a regular price of $9.00 per unit.Variable expenses are 55% of sales, and fixed expenses are $40,000.Management has decided to decrease the selling price to $8.00 in the hope of increasing its volume of sales.What is the contribution margin ratio when the selling price is reduced to $8.00 per unit? (Note: Round answer to two decimal places.)

• A) 38.13%
• B) 40.50%
• C) 75.46%
• D) 60.50%

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Definitions:

Recessionary Economy

An economic condition characterized by a significant decline in general economic activity over a sustained period.

Boom Economy

A phase of economic expansion characterized by rapid growth, increased production, and elevated consumer spending.

Variance

A measure of the dispersion or spread of a set of data points around their mean value; in finance, it's often used to measure volatility.

Portfolio Variance

A measure of the dispersion of returns of a portfolio's assets, indicating the degree of investment risk.