Question

The breakeven point decreases if? ________.

a. the total fixed costs decrease
b. the contribution margin per unit decreases
c. the selling price per unit decreases
d. the variable cost per unit increases

Answer 1

Beak-even point (BEP) in business is the point at which total cost and total revenue are equal. There is no net gain or loss, and one has "broken even", though opportunity costs have been paid and capital has received the risk-adjusted, expected return.
The formula for break-even is given by:
BEP=(Fixed Costs)/(Sales Price per Unit-Variable Cost per Unit)

From the above formula we can conclude that:
When Fixed costs reduces, the BEP decreases. Therefore the answer is [a]