Response to the following problem:
Given the following information, if the selling price per unit were to drop $2, from $100 to $98, the sales volume were to increase 500 units to 4,500 units per month, and advertising expenses were to increase by $1,000, what would happen:
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Selling price per unit
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$100
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Variable expenses per unit
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$40
|
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Fixed expenses per month
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$60,000
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a. The break-even point would increase
b. The break-even point would decrease
c. The contribution margin ratio would increase
d. Operating income would decrease