rrent selling price of $170. Variable costs are $130 per unit, and fixed costs per month average $6,240. Management is considering increasing the selling price to $190 per unit. Assume that the variable cost per unit of the product and monthly fixed expenses will not change as a result of the proposed increase in selling price. At the proposed increased selling price of $190 per unit, the contribution margin ratio is closest to: Group of answer choices 68.4%. 60.2%. 50.8%. 31.6%.

Question

Business

Rohan Haas

9 August, 14:24

rrent selling price of $170. Variable costs are $130 per unit, and fixed costs per month average $6,240. Management is considering increasing the selling price to $190 per unit. Assume that the variable cost per unit of the product and monthly fixed expenses will not change as a result of the proposed increase in selling price. At the proposed increased selling price of $190 per unit, the contribution margin ratio is closest to: Group of answer choices 68.4%. 60.2%. 50.8%. 31.6%.

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Answers (1)

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Oswaldo Peters · Answer 1

31.6%

Explanation:

Contribution margin ratio after the increase in selling price is:

CM = (Unit selling price - Unit variable cost) / Unit selling price

= (190 - 130) / 190 = 31.6%