COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Click on all the following ways a business can reduce its break-even output on an inelastic good?
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Increase fixed costs
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Decrease fixed costs
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Increase variable costs
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Decrease variable costs
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Increase price
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Explanation:
Detailed explanation-1: -The break-even point will be reduced by any (or any combination) of the following: Decreasing the amount of fixed costs/expenses. Decreasing the per unit variable costs/expenses. Increasing the selling prices without causing a decrease in sales.
Detailed explanation-2: -Examples Causing a Break-even Point to Increase The break-even point will increase by any of the following: An increase in the amount of the company’s fixed costs/expenses. An increase in the per unit variable costs/expenses. A decrease in the company’s selling prices.
Detailed explanation-3: -Lowering variable costs will increase the unit contribution margin and cause the break-even point to be lower.
There is 1 question to complete.