Asked by Osano Enoch on May 19, 2024
Verified
Which of the following conditions would cause the break-even point to decrease?
A) total fixed costs increase
B) unit selling price decreases
C) unit variable cost decreases
D) unit variable cost increases
Break-even Point
The point at which total costs equal total revenues, indicating that a business is neither making a profit nor a loss.
Fixed Costs
Costs that do not change in total with changes in activity level over a relevant range, such as rents, salaries, and insurance premiums.
- Analyze the influence of alterations in fixed spendings, variable spendings, and sales pricing on the analysis of break-even points.
- Identify the factors that cause the break-even point to increase or decrease.
Verified Answer
DV
Daniel VargheseMay 22, 2024
Final Answer :
C
Explanation :
If the unit variable cost decreases, the break-even point will decrease because there is less cost to cover before making a profit.
Learning Objectives
- Analyze the influence of alterations in fixed spendings, variable spendings, and sales pricing on the analysis of break-even points.
- Identify the factors that cause the break-even point to increase or decrease.