Question

A manager does a break-even analysis and finds that his value for BE, the break-even point,...

A manager does a break-even analysis and finds that his value for BE, the break-even point, has decreased over time. Which of the following could be responsible for this event?

VC has decreased.

P has increased.

P has decreased.

TFC has increased.
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Answer #2

VC has decreased.

VC has decreased means a decrease in the Break-even point.


Explanation:

A manager does a break-even analysis and finds that his value for BE, the break-even point, has decreased over time. The decreases in VC which is the variable cost could be responsible for this event. This is because decreasing both the variable and the fixed costs of each product increases the contribution margin of products sold which increases the total revenue thus decreasing the break-even point.

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