The selling price of a product is originally greater than the variable cost of producing it. Assume that the selling price and the variable cost per unit both increase 20% and fixed costs do not change. What is the effect of this change on the contribution margin per unit and the contribution margin ratio?
a. Contribution margin per unit and the contribution margin ratio both remain unchanged.
b. Contribution margin per unit and the contribution margin ratio both increase.
c. Contribution margin per unit increases and the contribution margin ratio remains unchanged.
d. Contribution margin per unit decreases and the contribution margin ratio remains unchanged.
c
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What will be an ideal response?
Aloe Company reports its income from its investment in Palm Company under the equity method. Aloe recognized income of $125,000 from its investment in Palm during the current year. Palm declared and paid dividends of which Aloe's share was $25,000 during the current year. The effect of these activities on the operating section of the statement of cash flows of Aloe Company prepared for the
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Indicate whether the statement is true or false