Asked by Natalia Montenegro on May 18, 2024
Verified
If direct materials cost per unit increases, the break-even point will increase.
Direct Materials Cost
The expense associated with raw materials directly incorporated into a finished product.
Break-even Point
Break-even Point is the financial analysis term that indicates when total costs and total revenues are exactly equal, resulting in neither profit nor loss.
- Implement insights on cost dynamics to assess adjustments in cost configurations and their effects on an enterprise's fiscal stability.
- Understand the impact of variations in cost components on the profitability of a company.
- Analyze the impact of changes in variable and fixed costs on the break-even point.
Verified Answer
IT
Iyonna TaylorMay 24, 2024
Final Answer :
True
Explanation :
If direct materials cost per unit increases, the cost per unit of production will increase. This means that the contribution margin per unit will decrease, and more units will need to be sold to cover fixed costs and break even. Therefore, the break-even point will increase.
Learning Objectives
- Implement insights on cost dynamics to assess adjustments in cost configurations and their effects on an enterprise's fiscal stability.
- Understand the impact of variations in cost components on the profitability of a company.
- Analyze the impact of changes in variable and fixed costs on the break-even point.
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