If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:
A) decrease
B) increase
C) remain the same
D) increase or decrease, depending upon the percentage increase in wage rates

Question

Quizplus · Accepted Answer

The break-even point is the level of sales at which total revenues equal total costs. If variable costs per unit increase, the cost of producing each unit will increase, which means the break-even point will increase as well. This is because more units will need to be sold to cover the higher variable costs and reach the same level of total costs.

If Variable Costs Per Unit Increased Because of an Increase