The breakeven point for a service organisation will decrease if
A) The variable cost ratio increases
B) The mix of less profitable services increases
C) The contribution margin ratio increases
D) Fixed costs increase

Question

Quizplus · Accepted Answer

If the contribution margin ratio increases, it means that the revenue generated from each unit of service sold exceeds the variable cost per unit. This will lead to a decrease in the breakeven point as the organisation will need to sell fewer units of service to cover its fixed costs. The other options would have the opposite effect and increase the breakeven point.

The Breakeven Point for a Service Organisation Will Decrease If