Question

Which of the following will lower the breakeven point? (1)- a decrease in the sales price per unit (2)- an increase in total fixed costs (3)- an increase in the variable costs per unit (4)-an increase in the sales price per unit

Answer 1

Answer: (4) An increase in the sales price per unit

Explanation:

  The break-even point is the point of the production level where the total expenses are gets equal to the total revenue. During the manufacturing process, the break-even point produces the equal amount of revenue as compared to the expenses in the accounting period.  

The break even point formula are mainly expressed in the units and it is expressed as:  

 = Fixed cost ÷ Contribution per unit

According to the formula, if the sales price per unit gets increased then, the the break-even pint gets decreased.