Question

If the price per unit were doubled at the same time that the variable cost per unit was doubled, the break-even point would be:

Answer 1

Answer:

halved

Explanation:

Breakeven quantity are the number of  units produced and sold at which net income is zero

Breakeven quantity = fixed cost / price – variable cost per unit

Assume fixed cost is initially 1000 units, price is 10, variable cost is 5

breakeven quantity = 1000 / (10 - 5) = 200

assume price per unit were doubled at the same time that the variable cost per unit was doubled

1000 / ( 20 - 10) = 100

breakeven point is halved