Which of the following conditions would cause the break-even point to decrease?
A) Increase in total fixed costs
B) Decrease in unit selling price
C) Decrease in unit variable cost
D) Increase in unit variable cost

Question

Quizplus · Accepted Answer

The break-even point is the level of sales at which the total revenue equals total cost. It can be calculated as fixed costs divided by contribution margin, where contribution margin is the difference between selling price per unit and variable cost per unit. Therefore, a decrease in unit variable cost would increase the contribution margin, which means that fewer units would need to be sold to cover the fixed costs and break-even.

Which of the Following Conditions Would Cause the Break-Even Point