What would be the effect on the break-even point if sales remain the same and the margin of safety increases?
A) The break-even point would increase.
B) The break-even point would decrease.
C) The break-even point would remain the same.
D) The break-even point would decrease by half.

Question

Quizplus · Accepted Answer

An increase in margin of safety means that sales exceed the break-even point by a larger amount, indicating that the business is more profitable and has a higher level of cushion against losses. This results in a lower break-even point, as the business has more room to operate before it starts to incur losses.

What Would Be the Effect on the Break-Even Point If