For the forthcoming year, E plc’s variable costs are budgeted to be 60 per cent of sales value and fi xed costs are budgeted to be 10 per cent of sales value.

If E plc increases its selling prices by 10 per cent, but if fi xed costs, variable costs per unit and sales volume remain unchanged, the effect on E plc’s contribution would be:

(A) a decrease of 2 per cent.

(B) an increase of 5 per cent.

(C) an increase of 10 per cent.

(D) an increase of 25 per cent.