If fixed costs increase, the break-even point in units will
A) increase.
B) decrease.
C) remain the same.
D) remain the same; however, contribution per unit will decrease.

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not vary with changes in the level of production or sales. Therefore, if fixed costs increase, total costs will increase, leading to a higher break-even point in units. This is because a higher number of units will need to be sold to cover the increased fixed costs before reaching the point where the company starts making a profit.

If Fixed Costs Increase, the Break-Even Point in Units Will