If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will:

A) decrease.
B) increase.
C) not change.
D) change but direction cannot be determined.

Question

Rachael Hubbard · Accepted Answer

Final Answer : C, Explanation :  The break-even point is the number of units a company must sell to cover all of its costs and start making a profit. If the selling price is increased by $2 per unit and the variable labor cost also increases by $2 per unit, the contribution margin per unit remains the same. Therefore, the break-even point in units will not change.

If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will:

A) decrease.
B) increase.
C) not change.
D) change but direction cannot be determined.

Definitions

Learning Objectives

Learning Objectives

Related questions

If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will:A) decrease.B) increase.C) not change.D) change but direction cannot be determined.

Definitions

Learning Objectives

Learning Objectives

Related questions

If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will:

A) decrease.
B) increase.
C) not change.
D) change but direction cannot be determined.