Contribution margin ratio increases with higher selling price Steps:

• Original contribution per unit: $100 -$40 = $60; ratio =$60/$100 = 60%.
• New selling price: $100 +$10 = $110; variable cost unchanged at$40.
• New contribution per unit: $110 -$40 = $70; ratio =$70/$110 ≈ 63.6%.
• Change in ratio: 63.6% - 60% = 3.6% increase.

Why B is correct:

• The contribution to sales ratio, defined as (selling price - variable cost)/selling price, rises by 3.6 percentage points because the fixed variable cost dilutes less against the higher price.

Why the others are wrong:

• A: Incorrect direction; ratio increases, not decreases.
• C: Wrong value and direction; 5.4% decrease errors from using old contribution on new sales ($60/$110 ≈ 54.5%).
• D: Overstates increase; actual change is 3.6%, not 5.4%.

Final answer: B