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%.

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Definitions:

Fewer Comparisons

A methodological approach in research that aims to reduce the risk of Type I errors by limiting the number of hypotheses tests or comparisons.

Tukey Test

A statistical test used to compare the means of three or more groups to find which pairs of groups differ significantly.

Familywise Error

The probability of making one or more Type I errors across a set of statistical tests.

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it determines the cut-off point for significance in hypothesis testing.