Asked by Crystal Weaver on Apr 30, 2024

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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.
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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.