Suppose variable costs per unit decrease. What will be the effect on sales volume at the break-even point?
A) Sales volume will increase.
B) Sales volume will decrease.
C) Sales volume will remain the same.
D) Sales volume will remain the same; however, contribution margin per unit will decrease.

Question

Quizplus · Accepted Answer

When variable costs per unit decrease, the contribution margin per unit increases, which means fewer units need to be sold to cover fixed costs, thus decreasing the sales volume required at the break-even point.

Suppose Variable Costs Per Unit Decrease