Which of the following would not affect the break-even point? a. Variable expense per unit b.Number of units sold c.Total fixed expenses d. Selling price per unit
AnswerThe break-even point or break-even level represents the sales amount in either unit or revenue terms which is needed to cover total expenses, including both fixed and variable expenses to the company. Break-even point indicates minimum sales units or amount for zero profit level. Any sales after break-even level is the profit for company. But break-even point does not change on increasing or decreasing sales unit. Formula for breakeven point is given below which does not include number of units sold. Break-Even Point in Units = Fixed Costs / (Price of Product – Variable Costs per Unit).
Hence option b. Number of units sold is correct answer.