Asked by Kelsee Katsanes on Jul 04, 2024
Verified
The break-even point in unit sales increases when variable expenses:
A) remain unchanged and the selling price increases.
B) decrease and the selling price remains unchanged.
C) increase and the selling price remains unchanged.
D) decrease and the selling price increases.
Break-even Point
is the level of sales at which total revenue equals total costs, resulting in neither profit nor loss for the business.
Variable Expenses
Expenses that change in proportion with the level of business activity or output.
Selling Price
The amount of money charged for a product or service, which may include costs of production, distribution, and a markup for profit.
- Comprehend the idea of the break-even point and the methodology for its calculation.
- Comprehend the influence of variable and fixed expenses on business profitability and the point of break-even.
Verified Answer
ZK
Zybrea KnightJul 09, 2024
Final Answer :
C
Explanation :
The break-even point is the number of units sold where the total revenue equals the total cost. If variable expenses increase, it will take more unit sales to break even. The selling price remaining unchanged will not affect the break-even point, as it only affects the revenue side of the equation. Decreasing variable expenses or increasing selling price would lower the break-even point. Therefore, the correct choice is C.
Learning Objectives
- Comprehend the idea of the break-even point and the methodology for its calculation.
- Comprehend the influence of variable and fixed expenses on business profitability and the point of break-even.