Which of the following would take place if a company was able to reduce its variable cost per unit, all of things remaining constant? $\begin{array} { | l | l | l | }
\hline & \text { Contribution Margin } & \text { Break-even Point } \
\hline 1 & \text { Increase } & \text { Increase } \
\hline 2 & \text { Increase } & \text { Decrease } \
\hline 3 & \text { Decrease } & \text { Increase } \
\hline 4 & \text { Decrease } & \text { Decrease } \
\hline 5 & \text { Increase } & \text { No effect } \
\hline
\end{array}$
A)1
B)2
C)3
D)4
E)5

Question

Which of the following would take place if a company was able to reduce its variable cost per unit, all of things remaining constant? $\begin{array} { | l | l | l | } 
\hline & \text { Contribution Margin } & \text { Break-even Point } \
\hline 1 & \text { Increase } & \text { Increase } \
\hline 2 & \text { Increase } & \text { Decrease } \
\hline 3 & \text { Decrease } & \text { Increase } \
\hline 4 & \text { Decrease } & \text { Decrease } \
\hline 5 & \text { Increase } & \text { No effect } \
\hline
\end{array}$
A)1
B)2
C)3
D)4
E)5

Quizplus · Accepted Answer

If a company is able to reduce its variable cost per unit, the contribution margin will increase because each unit sold will now generate more profit. Additionally, the break-even point will decrease because the company now needs to sell fewer units to cover its fixed costs. Therefore, the correct choice is B: Increase in contribution margin and decrease in break-even point.

Which of the Following Would Take Place If a Company