On March 1, 2020, Pronghorn Company sold goods to Goosen Inc. for $600,000 in exchange for a 5-year, zero-interest-bearing note
1 answer:
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Answer:
d. Selling Price
Explanation:
Break even point is calculated as
Thus, break even point in units only in two cases,
- Fixed cost is reduced that is decreased,
- Contribution per unit is increased.
Now, here the options are
a. Increase in units sales volume is of no relevance as will not impact the fixed cost or contribution per unit.
b. Increase in fixed cost will result in higher break even point, as numerator in the fraction will increase.
c. Increase in unit variable cost will ultimately decrease the contribution thus, it is of no relevance.
d. Increase in selling price will increase the contribution per unit, that is the increase in denominator value in fraction, thus, break even units will decrease.
Correct option is
d. Selling Price