Final answer:
The option that is NOT a reasonable explanation for the increasing trend in the profit margin of East Corp. from 2011 to 2013 is that East Corp. declared a cash dividend to shareholders.
Step-by-step explanation:
The given information shows the profit margin for East Corp. for each year from 2011 to 2013. It is stated that the profit margin increased each year during that period. We are asked to identify the explanation that is NOT reasonable for this trend. Let's analyze the options:
- The variable costs decreased due to an improvement in technology. This is a possible explanation for an increase in profit margin, as reducing variable costs can lead to higher profit. Therefore, this option is a reasonable explanation for the trend.
- An increase in the sales price due to higher demand resulting from a successful marketing campaign. Similarly, a successful marketing campaign leading to increased sales and higher prices can contribute to a higher profit margin. This option is also a reasonable explanation for the trend.
- East Corp. declared a cash dividend to shareholders. This option is the correct answer, as declaring a cash dividend to shareholders does not directly affect the profit margin. Dividends are a distribution of profits to shareholders, but they do not impact the underlying profitability of the company. Therefore, this option is NOT a reasonable explanation for the trend.
To summarize, the option that is NOT a reasonable explanation for the increasing trend in the profit margin of East Corp. from 2011 to 2013 is that East Corp. declared a cash dividend to shareholders.