If the sales price per unit increases while the variable cost per unit and total fixed costs remain constant, which of the following statements is true?

Question

Quizplus · Accepted Answer

When the sales price per unit increases while the variable cost per unit and total fixed costs remain constant, the contribution margin (sales price per unit minus variable cost per unit) increases. This means that each unit sold contributes more to covering the fixed costs and generating profit. As a result, the breakeven point decreases because fewer units need to be sold to cover the fixed costs.

If the Sales Price Per Unit Increases While the Variable