Final answer:
Without specific data on the rates at which the variable cost per unit and the selling price per unit decrease, it is impossible to determine the new contribution margin ratio in relation to the old one. Thus, the correct answer is D. Cannot determine with the information given.
Step-by-step explanation:
If both the variable cost per unit and the selling price per unit decrease, it results in a change to the contribution margin ratio. The contribution margin ratio is calculated as (Selling Price per Unit - Variable Cost per Unit) divided by Selling Price per Unit. When both the selling price and variable costs decrease, the effect on the contribution margin ratio depends on the relative rate at which each decreases. If the reduction in the selling price is proportionally greater than the reduction in variable costs, then the contribution margin ratio will decrease. Conversely, if the variable costs decrease at a greater rate than the selling price, the contribution margin ratio could potentially increase.
However, without specific data on the rates at which these decreases occur, it is impossible to determine the new contribution margin ratio in relation to the old one. Therefore, the correct answer to the question is D. Cannot determine with the information given.