Which of the following conditions would cause the break-even point to decrease?

Which of the following conditions would cause the break-even point to decrease?

Total fixed costs increase
Unit selling price decreases
Unit variable cost decreases
Unit variable cost increases

Answer

Contribution margin=Sales-Variable costs

Breakeven point=Fixed cost/Contribution margin

Hence when Variable cost decreases;Contribution margin increases and hence as a result breakeven point decreases.

Hence the correct option is C.

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