All else constant, the accounting break-even level of sales will decrease when the:
A) Fixed costs increase.
B) Depreciation expense decreases.
C) Contribution margin decreases.
D) Variable costs per unit increase.
E) Selling price per unit decreases.

Question

Quizplus · Accepted Answer

The accounting break-even level of sales decreases when depreciation expense decreases because depreciation is a non-cash expense that reduces taxable income, thereby reducing the total amount of cash needed to cover expenses and reach break-even.

All Else Constant, the Accounting Break-Even Level of Sales Will