Suppose the selling price per unit increases.What will be the effect on the break-even point in units?
A)The units will decrease.
B)The units will increase.
C)The units will remain the same.
D)The units will remain the same; however, contribution per unit will decrease.

Question

Quizplus · Accepted Answer

When the selling price per unit increases, the contribution margin per unit (selling price per unit - variable cost per unit) also increases. This means that each unit sold contributes more towards covering fixed costs. Therefore, fewer units need to be sold to reach the break-even point, leading to a decrease in the break-even point in units.

Suppose the Selling Price Per Unit Increases