ECONOMICS

Detailed explanation-1: -Expert-Verified Answer. Answer: 15% increase in variable costs would decrease the unit contribution margin the most.

Detailed explanation-2: -If it saves $2 on a discount and lowers the price by $2, the contribution margin per unit remains the same, but demand likely increases. Increases sales at the same margin lead to a higher total contribution margin.

Detailed explanation-3: -Materials or Product Costs If your raw materials costs increase as a manufacturer, your contribution margin diminishes because of a higher cost basis. Similarly, if manufacturing costs go up, the costs for distributors and wholesalers to acquire the goods goes up as well.

Detailed explanation-4: -If a product’s contribution margin is negative, the company is losing money with each unit it produces, and it should either drop the product or increase prices.

Detailed explanation-5: -The increase in the selling price or decrease in the variable cost will lead to an increase in the contribution margin per unit. Hence, a 9% increase in selling price will increase the contribution margin per unit.