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

Question

Quizplus · Accepted Answer

A decrease in variable costs per unit would decrease the total cost per unit, which means the company would need to sell fewer units to cover its fixed costs and reach the break-even point. Therefore, the break-even point would decrease.

If Variable Costs Per Unit Decreased Because of a Decrease