Which of the following statements is true if total fixed costs decreases while the sales price per unit and variable costs per unit remain constant?
A) The contribution margin increases.
B) The breakeven point increases.
C) The contribution margin decreases.
D) The breakeven point decreases.

Question

Quizplus · Accepted Answer

When total fixed costs decrease while the sales price per unit and variable costs per unit remain constant, the contribution margin per unit remains the same but the total contribution margin increases due to increased sales revenue. This leads to a lower breakeven point because less revenue is needed to cover the reduced fixed costs. Therefore, the correct choice is D.

Which of the Following Statements Is True If Total Fixed