A decrease in the sales price in the basic cost-volume-profit model would
A)require a recomputation of the gross profit per unit.
B)be offset by an increase in unit costs.
C)decrease the break-even volume.
D)increase the break-even volume.

Question

Quizplus · Accepted Answer

A decrease in the sales price in the basic cost-volume-profit model would result in a decrease in contribution margin per unit, which would increase the break-even volume. This is because the lower sales price would require a higher volume of units sold to cover fixed costs and reach the break-even point.

A Decrease in the Sales Price in the Basic Cost-Volume-Profit