Which one of the following statements about break-even analysis for evaluating products or services is true?
A)The break-even quantity will tend to increase as the variable cost per unit of production decreases.
B)As sales increase beyond the break-even quantity,total before-tax profits tend to decrease.
C)A restaurant's opening of downsized facilities with only drive-through service is an example of lowering fixed costs and the break-even quantity.
D)Increasing the unit selling price has the effect of increasing the break-even quantity.

Question

Quizplus · Accepted Answer

Downsizing facilities and offering only drive-through service can help a restaurant lower its fixed costs, which can ultimately reduce its break-even quantity. The other statements are false. The break-even quantity decreases as variable cost per unit of production decreases (not increases), total before-tax profits tend to increase as sales increase beyond the break-even quantity (not decrease), and increasing the unit selling price tends to decrease the break-even quantity (not increase it).

Which One of the Following Statements About Break-Even Analysis for Evaluating