Assume fixed costs are constant and contribution margin per unit is reduced 50 percent.What will happen to the break-even point in units?
A)It will decrease 50 percent.
B)It will increase 100 percent.
C)It will be the same.
D)It will increase 50 percent.

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing fixed costs by the contribution margin per unit. If the contribution margin per unit is reduced by 50%, the denominator in this calculation is halved, causing the break-even point in units to double, or increase by 100%.

Assume Fixed Costs Are Constant and Contribution Margin Per Unit