If the Selling Price Per Unit and the Variable Cost

question 131

Multiple Choice

If the selling price per unit and the variable cost per unit both increase by 5%, what is the effect on the contribution margin per unit and on the contribution margin ratio? Contribution margin per unit Contribution margin ratio

• A)Increase Increase
• B)Increase No effect
• C)Decrease No effect
• D)Decrease Increase

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Definitions:

Chart of Accounts

A structured list of all the financial accounts in an organization's general ledger, categorized by short and long-term liabilities, assets, revenue, and expenses.

Income Statement

A financial report that shows a company's revenues, expenses, and net income over a specific period of time.

Trial Balance

An accounting report that lists the balances of all ledgers accounts to verify that the total debits equal the total credits, used for internal purposes to check for errors.

Ledger

A book or collection of financial accounts in which transactions are recorded.