If the contribution margin per unit decreases, the break-even point in units
A) will increase.
B) will decrease.
C) will remain the same.
D) cannot be determined from the information given.

Question

Quizplus · Accepted Answer

The break-even point in units is determined by dividing the total fixed costs by the contribution margin per unit. If the contribution margin per unit decreases, it means that there is less money available to cover the fixed costs with each unit sold. As a result, the company needs to sell more units to cover the same fixed costs, which increases the break-even point in units.

If the Contribution Margin Per Unit Decreases, the Break-Even Point