(CPA adapted)The strategy MOST LIKELY to reduce the break-even point would be to:
A)increase both the capacity-related (fixed)costs and the contribution margin per unit.
B)decrease both the capacity-related (fixed)costs and the contribution margin per unit.
C)decrease the capacity-related (fixed)costs and increase the contribution margin per unit.
D)increase the capacity-related (fixed)costs and decrease the contribution margin per unit.

Question

Quizplus · Accepted Answer

To reduce the break-even point, we need to increase the contribution margin per unit and decrease the fixed costs. This will result in each unit covering a larger portion of the fixed costs, lowering the number of units that need to be sold to break even. Option C is the only choice that aligns with this strategy. Increasing fixed costs or decreasing contribution margin per unit would have the opposite effect and raise the break-even point, while option A would only have a minimal effect on the break-even point.

(CPA Adapted)The Strategy MOST LIKELY to Reduce the Break-Even Point