Variable cost change via contribution margin Steps:

• Fixed costs = April total contribution - April profit = $22,000 -$8,000 = $14,000 (constant).
• May total contribution = May profit + fixed costs = $10,500 +$14,000 = $24,500.
• April contribution per unit = $22,000 / 1,000 units =$22.
• May contribution per unit = $24,500 / 1,200 units ≈$20.42; variable cost per unit increased by $22 -$20.42 = $1.58 (since selling price constant, ΔV = -Δ contribution per unit). Why D is correct:
• Contribution margin = selling price - variable cost per unit; with constant selling price, the $1.58 drop in contribution per unit equals the increase in variable cost per unit. Why the others are wrong:
• A: Contribution per unit fell, so variable cost rose (opposite direction).
• B: $0.75 matches profit per unit rise ($8 to $8.75), a common mix-up ignoring full contribution effect.
• C: Wrong direction; variable cost increased, not decreased. Final answer: D