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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