The breakeven point decreases if ________.
A) the variable cost per unit increases
B) the total fixed costs decrease
C) the contribution margin per unit decreases
D) the selling price per unit decreases

Question

Quizplus · Accepted Answer

The breakeven point is the point where revenues equal total costs (fixed and variable). To decrease the breakeven point, total fixed costs must decrease. This can happen for example if the company reduces overhead expenses or rents a cheaper facility. The other options (A, C, D) would increase the breakeven point as they result in higher costs or lower revenues.

The Breakeven Point Decreases If ________