Question

Which of the following factors affect the breakeven point for both absorption costing and variable​ costing? 1. Fixed​ (manufacturing and​ operating) costs. 2. Contribution margin per unit. 3. Production level in units in excess of breakeven sales in units. 4. Denominator level chosen to set the fixed manufacturing cost rate. A. 1. B. 1. and 2. C. ​1., 2., and 3. D. All of the factors affect the breakeven point under both methods.

Answer 1

Answer:

B) 1. and 2.

Explanation:

Both variable costing and absorption costing are affected by fixed costs (both manufacturing overhead and administrative overhead) and contribution margin per unit.  

Cost absorption costs are also affected by production levels and the denominator level chosen to set the fixed manufacturing cost rate.