In breakeven analysis, the reduction of the fixed cost of an alternative, while leaving all other costs of alternatives the same
A) Will make it relatively more attractive at lower volumes of production
B) Will make it relatively less attractive at lower volumes of production
C) Will not change its attractiveness at lower volumes but will make it more expense on a per unit bases
D) Will result in the variable cost increasing because the combination of variable and fixed costs must stay the same.

Question

Quizplus · Accepted Answer

Reducing the fixed cost of an alternative makes it more attractive at lower volumes of production because the total costs are lower, making it easier to reach the breakeven point.

In Breakeven Analysis, the Reduction of the Fixed Cost of an Alternative