As the contribution margin rises, the break-even point goes down.

Question

Quizplus · Accepted Answer

The break-even point is the point at which a company's total revenue equals its total costs, resulting in zero profit or loss. The contribution margin is the amount of revenue left over after deducting variable costs from sales revenue. As the contribution margin increases, more revenue is available to cover the fixed costs, which in turn, lowers the break-even point. Therefore, the statement is true.

As the Contribution Margin Rises, the Break-Even Point Goes Down