Which of the following would be likely to decrease the contribution margin per unit?
Lowering the selling price to meet the price of competitors
Decreasing the commissions paid on each unit sold an increasing the salary of the salespeople
Reducing the amount of advertising done on television
Using lower quality (and lower cost) components used to manufacture the product
Expert Answer
Answer : Lowering the selling price to meet the price of competitors
Explanation : We know that ,
Contribution per unit = Selling price per unit – variable cost per unit.
Thus when selling price per unit decreases ( with no change in variable cost
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