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Problem 1: If the sales price per unit decreases while the variable cost per unit and total fixed costs remain constant, which of the following will occur?
a. The contribution margin decreases and the breakeven point increases. b. The contribution margin decreases and the breakeven point decreases.c. The contribution margin decreases and the breakeven point decreases. d. The contribution margin increases and the breakeven point increases.
Problem 2: John James Junk Food sells brownies for $4 per brownie. Variable costs are $3 per brownie. Fixed costs are $2,500 per month. What is James' contribution margin ratio?
a. 63%b. 25%c. 75 %d. 267%
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