Problem related to contribution margin


Belton Company currently sells its products for $25 per unit. Management is contemplating a 20% increase in the sales price for next year. Variable costs are currently 30% of sales revenue and are not expected to change next year. Fixed expenses are $150,000. If fixed costs were to decrease 10% during the current year, contribution margin would do what?

A. Increase 10%

B. Impossible to determine with the given data

C. Decrease 10%

D. Remain the same

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Accounting Basics: Problem related to contribution margin
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