All other things being equal, a decrease in the contribution margin for a firm would:
A) increase the break-even point
B) decrease the break-even point
C) have no impact on the break-even point
D) not enough information given

Question

Quizplus · Accepted Answer

The break-even point is the point at which a company's total revenue equals its total expenses. A decrease in contribution margin means that the company is making less profit on each unit sold, which would require the company to sell more units to cover its expenses, thus increasing the break-even point.

All Other Things Being Equal, a Decrease in the Contribution