Last Year, Variable Expenses Were 60% of Total Sales and Fixed

question 103

Multiple Choice

Last year, variable expenses were 60% of total sales and fixed expenses were 10% of total sales. If the company increases its selling prices by 10%, but if fixed expenses, variable costs per unit, and unit sales remain unchanged, the effect of the increase in selling price on the company's total contribution margin would be:

• A) a decrease of 2%.
• B) an increase of 5%.
• C) an increase of 10%.
• D) an increase of 25%.