Suppose variable expenses were to decrease by $3.00 per unit. What effect would this have on the cost volume profit analysis?

Question

Quizplus · Accepted Answer

The unit contribution margin, which is the difference between the selling price per unit and the variable cost per unit, would increase by $3.00 if the variable expenses per unit decrease by $3.00. This increase in contribution margin would also result in a decrease in the break-even point in units, as fewer units would need to be sold to cover fixed costs.

Suppose Variable Expenses Were to Decrease by $3