Select the correct statement regarding break-even point analysis.
A) The break-even point in sales dollars equals total fixed costs divided by contribution margin per unit.
B) An increase in fixed costs causes the break-even point to increase.
C) An increase in contribution margin per unit causes the break-even point in units to increase.
D) A decrease in the variable cost per unit causes the break-even point in units to increase.

Question

Quizplus · Accepted Answer

An increase in fixed costs, without a corresponding increase in sales price or a decrease in variable costs, will increase the number of units that need to be sold to cover those fixed costs, thereby increasing the break-even point.

Select the Correct Statement Regarding Break-Even Point Analysis