What happens to the break-even point in sales dollars when the contribution margin ratio increases?
A) Break-even point increases.
B) Break-even point decreases.
C) Break-even point stays the same.
D) Not enough information to answer the question.

Question

Quizplus · Accepted Answer

When the contribution margin ratio increases, it means that the contribution margin per unit or per dollar of sales increases. As a result, the break-even point decreases since fewer sales are needed to cover fixed costs and start generating profits.

What Happens to the Break-Even Point in Sales Dollars When