Using cost-volume-profit analysis, we can conclude that a 20 per cent reduction in variable costs will
A)reduce the break-even sales volume by 20 per cent.
B)reduce total costs by 20 per cent.
C)reduce the slope of the total cost line by 20 per cent.
D)not affect the break-even sales volume if there is an offsetting 20 per cent increase in fixed costs.

Question

Quizplus · Accepted Answer

Cost-volume-profit analysis shows that a reduction in variable costs decreases the slope of the total cost line, reflecting a lower cost for each unit produced or sold, but does not directly translate to a 20% reduction in break-even sales volume, total costs, or an unaffected break-even point with an increase in fixed costs.

Using Cost-Volume-Profit Analysis, We Can Conclude That a 20 Per