If a company raises its price per unit, but keeps total fixed cost and variable cost per unit the same, the break-even point will be lower.

Name: If a company raises its price per unit, but keeps total fixed cost and variable cost per unit the same, the break-even point will be lower.
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Question

Quizplus · Accepted Answer

When the price per unit increases, the contribution margin per unit also increases, which reduces the number of units needed to cover fixed costs, thus lowering the break-even point.

If a Company Raises Its Price Per Unit, but Keeps