The variable costing break-even point is dependent upon:
A)contribution margin per unit.
B)fixed (manufacturing and operating)costs.
C)Both A and B.
D)Neither A or B.

Question

Quizplus · Accepted Answer

The variable costing break-even point is dependent upon both contribution margin per unit and fixed (manufacturing and operating) costs. The contribution margin per unit represents the amount of revenue that is available to contribute towards covering the fixed costs of the business. Therefore, the higher the contribution margin per unit, the lower the break-even point. However, fixed costs also have an impact on the break-even point. The higher the fixed costs, the higher the break-even point, and vice versa. Thus, both A and B are important factors in determining the variable costing break-even point.

The Variable Costing Break-Even Point Is Dependent Upon