Fixed costs for a product are $30,000.The product itself sells for $3.00 and it costs $1.50 to make each product.How can the plant decrease the break-even point by 5000 units?
A)Increase P, the price of the item, by $0.50.
B)Increase TFC, the fixed costs for item, by $5000.
C)Decrease P, the price of the item, by $0.50.
D)Decrease TFC, the fixed costs for item, by $5000.

Question

Quizplus · Accepted Answer

Increasing the price of the item increases the contribution margin per unit, thus reducing the number of units needed to cover fixed costs.

Fixed Costs for a Product Are $30,000