Which of the following statements is TRUE if the variable cost per unit decreases while the sales price per unit and total fixed costs remain constant?

Question

Quizplus · Accepted Answer

The contribution margin is the sales price per unit minus the variable cost per unit. If the variable cost per unit decreases while the sales price per unit and total fixed costs remain constant, the contribution margin will increase. This means that each unit sold will contribute more towards covering the fixed costs and generating a profit. As a result, the break-even point will decrease, as fewer units need to be sold to cover the fixed costs.

Which of the Following Statements Is TRUE If the Variable