When the sales price per unit decreases,the breakeven point ________.
A) increases
B) decreases
C) remains the same
D) decreases proportionately

Question

Quizplus · Accepted Answer

When the sales price per unit decreases, the contribution margin per unit decreases as well. Since the breakeven point is the point at which the total contribution margin equals the fixed costs, a decrease in contribution margin will necessitate a higher level of sales in order to cover the fixed costs. Therefore, the breakeven point increases.

When the Sales Price Per Unit Decreases,the Breakeven Point ________