Which action will decrease a company's break-even point?
A) reducing total fixed costs
B) decreasing contribution margin per unit
C) increasing variable cost per unit
D) decreasing the selling price per unit

Question

Quizplus · Accepted Answer

The break-even point is the level of sales at which a company covers all of its costs and starts to make a profit. The break-even point can be decreased by reducing total fixed costs, as this will lower the total amount of revenue needed to cover all costs and reach the break-even point. The other options (B, C, and D) would increase the break-even point by reducing the contribution margin per unit, increasing variable costs per unit, or decreasing the selling price per unit, respectively.

Which Action Will Decrease a Company's Break-Even Point