Once sales reach the break-even point,each additional unit sold will:
A) increase fixed cost by a proportionate amount.
B) reduce the margin of safety.
C) increase the company's operating leverage.
D) increase profit by an amount equal to the per unit contribution margin.

Question

Quizplus · Accepted Answer

Once sales have reached the break-even point, the company has covered all of their fixed costs and is now earning profits equal to the per unit contribution margin for each additional unit sold. Therefore, each additional unit sold will increase profit by an amount equal to the per unit contribution margin.

Once Sales Reach the Break-Even Point,each Additional Unit Sold Will