ECONOMICS

Detailed explanation-1: -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.

Detailed explanation-2: -Total cost is a combination of total fixed cost and total variable cost. Hence, an increase in variable cost per unit causes a company’s break-even point to increase.

Detailed explanation-3: -If variable costs per unit increase, then the breakeven point will decrease. The break-even point is where total sales revenue equals total cost.

Detailed explanation-4: -Profit earned following your break even: Once your sales equal your fixed and variable costs, you have reached the break-even point, and the company will report a net profit or loss of $0. Any sales beyond that point contribute to your net profit.