Tower Company Manufactures and Sells a Single Product with a Positive

Multiple Choice

Tower Company manufactures and sells a single product with a positive contribution margin. If the selling price and the variable cost per unit both increase 5% and fixed costs do not change, what is the effect on the contribution margin per unit and the contribution margin ratio?
$\begin{array} { cc} & \text { Contribution margin per unit } & \text { Contribution margin ratio } \\\end{array}$
A. $\begin{array} { cc} &&&&& \text { No change } &&&&&&& \text { No change } \\\end{array}$
B. $\begin{array} { cc} &&&&& \text { Increase } &&&&&&&& \text { Increase } \\\end{array}$
C. $\begin{array} { cc} &&&&& \text { Increase } &&&&&&&& \text { No change } \\\end{array}$
D. $\begin{array} { cc} &&&&&\text { Increase } &&&&&&&& \text { Decrease } \\\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D