BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -A variable cost is a corporate expense that changes in proportion to how much a company produces or sells. Variable costs increase or decrease depending on a company’s production or sales volume-they rise as production increases and fall as production decreases.

Detailed explanation-2: -Increase in total variable cost is due to increase in production. Variable costs increase or decrease depending on a company’s production volume; they rise as production increases and fall as production decreases.

Detailed explanation-3: -The correct answer is option B) The break-even point decreases. If the sales production changes, the following effects must be considered. If the selling price per unit increases, the variable cost per unit remains the same.

Detailed explanation-4: -Therefore, an increase in variable costs increases the Break-even point. The company is required to produce only 1600 units, which is less by 400 units (2000 units-1600 units). Therefore, a decrease in Variable costs decreases the Break-even point.