Which one of the following statements about break-even analysis for evaluating products or services is TRUE?
A)The break-even quantity will tend to increase as the variable cost per unit of production decreases.
B)As sales increase beyond the break-even quantity,total before-tax profits tend to decrease.
C)A restaurant's opening of downsized facilities with only drive-through service is an example of lowering fixed costs and the break-even quantity.
D)Increasing the unit selling price has the effect of increasing the break-even quantity.

Question

Quizplus · Accepted Answer

The statement that a downsized restaurant with only drive-through service is an example of lowering fixed costs and the break-even quantity is true. By reducing their facility costs (rent, utilities, etc.), the restaurant is able to break even at a lower sales volume. The other statements are false. A) The break-even quantity will decrease as variable cost per unit of production decreases. B) Total before-tax profits tend to increase as sales increase beyond the break-even quantity. D) Increasing the unit selling price has the effect of decreasing the break-even quantity.

Which One of the Following Statements About Break-Even Analysis for Evaluating