Answer:
Option B is true.
Explanation:
Giving the following information:
The break-even point in units formula is:
Break-even point= fixed costs/ contribution margin
What changes the break-even point:
A variation in fixed costs.
A variation on the selling price.
A variation in the unitary variable cost.
<u>The higher the fixed costs, the higher the number of units. Lower the contribution margin, the higher the number of units.</u>
Therefore:
a. An increase in contribution margin per unit causes the break-even point in units to increase. False, is the opposite.
b. An increase in fixed costs causes the break-even point to increase. True, now the organization needs to sell more units to cover the fixed costs.
c. The break-even point in sales dollars equals total fixed costs divided by contribution margin per unit. False, in dollars you need to divide it for the contribution margin ratio (contribution margin / selling price).
d. A decrease in the variable cost per unit causes the break-even point in units to increase. False, is the opposite.
