Suppose the contribution margin per unit decreases. What will be the effect on the break-even point in units?
A) The units will increase.
B) The units will decrease.
C) The units will remain the same.
D) The units cannot be determined from the information given.

Question

Quizplus · Accepted Answer

If the contribution margin per unit decreases, it means that there will be a lower amount of profit per unit sold. Therefore, a higher number of units will need to be sold in order to reach the break-even point. As a result, the break-even point in units will increase.

Suppose the Contribution Margin Per Unit Decreases