An increase in cost (fixed cost or variable cost) tends to increase the operating breakeven point, whereas an increase in the sales price per unit will decrease the operating breakeven point.

Question

Quizplus · Accepted Answer

An increase in cost will increase the total cost per unit, thus increasing the breakeven point, while an increase in sales price will increase the contribution margin per unit, thus reducing the breakeven point.

An Increase in Cost (Fixed Cost or Variable Cost) Tends