If the selling price per unit can be increased, what will be the effect on the break-even point?

If the selling price per unit can be increased, what will be the effect on the break-even point?

multiple choice

    The break-even point will decrease. Correct
    The break-even point will increase.
    The break-even point will be unchanged.

Explanation

Knowledge Check 01
 
If the selling price per unit can be increased, the break-even point will decrease.
 

Based on a CVP graph, select the correct drop-down answer for each question.

Explanation

Knowledge Check 01
 
Item #1:
This line starts at zero on the vertical axis (zero units and zero dollars of sales). The slope of this line equals the selling price per unit. This line must not extend beyond the company’s productive capacity.
 
Item #2:
The total cost line begins at the fixed cost level and increases based on the slope of the variable cost per unit.
 

Knowledge Check 01
 
 
Revenue     $ 100,000
Variable Costs     20,000
Fixed Costs     5,000

 
What is the income?

multiple choice

    $80,000
    $75,000 Correct
    $95,000
    $60,000

Explanation

Knowledge Check 01
   
The contribution margin is $100,000 − $20,000, or $80,000. Income then, is contribution margin minus fixed costs, or $80,000 − $5,000 = $75,000.

 

Thanks