Dirth Company Sells Only One Product at a Regular Price

Multiple Choice

Dirth Company sells only one product at a regular price of £7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are £30,000. Management has decided to decrease the selling price to £6.00 in hopes of increasing its volume of sales. What is the contribution margin ratio when the selling price is reduced to £6 per unit?

A) 25%
B) 40%
C) 75%
D) 60%