Asked by Aline Rugira on Jun 10, 2024
Verified
If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.
Unit Contribution Margin
The difference between the selling price per unit and the variable cost per unit, indicating how much each unit sold contributes to fixed costs and profits.
Break-even Point
The production level at which total revenues equals total expenses, resulting in neither profit nor loss.
- Appreciate the importance of contribution margin in determining break-even points and influencing decisions related to profit generation.
- Apply knowledge of cost behavior and how it changes with activity levels to real-world business scenarios.
Verified Answer
MS
MaKayla SmallwoodJun 15, 2024
Final Answer :
False
Explanation :
If the unit contribution margin decreases, the break-even point will actually increase because more units will need to be sold to cover fixed costs.
Learning Objectives
- Appreciate the importance of contribution margin in determining break-even points and influencing decisions related to profit generation.
- Apply knowledge of cost behavior and how it changes with activity levels to real-world business scenarios.
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