Asked by Crystal Weaver on Apr 30, 2024
Verified
If direct materials cost per unit increases, the break-even point will decrease.
Direct Materials
Raw materials that are directly traceable to the manufacturing of a product and can be easily quantified and allocated to that product.
Break-even Point
The production level at which total revenues equal total expenses, and there is neither profit nor loss.
- Recognize the impact of changes in cost structures and sales on the break-even point and profitability.
Verified Answer
FY
fatima yateemMay 05, 2024
Final Answer :
False
Explanation :
If the direct materials cost per unit increases, the cost per unit will also increase, thus increasing the break-even point. This is because the higher cost per unit means more sales will need to be made in order to cover the increased costs and reach the break-even point.
Learning Objectives
- Recognize the impact of changes in cost structures and sales on the break-even point and profitability.