Asked by Timothy Hauser on May 10, 2024
Verified
If direct materials cost per unit increases, the break-even point will increase.
Materials Cost
The total expense incurred from acquiring raw materials used in the manufacture of products.
Break-even Point
The level of production or sales at which costs equal revenues, and there is no profit or loss.
- Familiarize oneself with the nature of the break-even point and how fluctuations in costs and sales influence it.
- Identify various cost categories (fixed, variable, and mixed) and understand their influence on cost-volume-profit evaluation.
Verified Answer
YU
Yuliya UkhachMay 17, 2024
Final Answer :
True
Explanation :
If direct materials cost per unit increases, the cost per unit will increase, ultimately increasing the break-even point. This is because it will take more units to cover the higher costs and reach the point where revenue equals expenses.
Learning Objectives
- Familiarize oneself with the nature of the break-even point and how fluctuations in costs and sales influence it.
- Identify various cost categories (fixed, variable, and mixed) and understand their influence on cost-volume-profit evaluation.