Question:-
Consider the following statements :
The break-even point increases
1. If the fixed cost per unit increases
2. If the variable cost per unit decreases
3. If the selling price per unit decreases
Which of the above statements is/are correct ?
Option (A)
1 only
Option (B)
1 and 2
Option(C)
2 and 3
Option(D)
1 and 3
Correct Option:
(D)
Question Solution:
CF + Cvx = Csx
x = {CF / (Cs - Cv)}
Therefore if the Fixed Cost/Unit i.e. CF increases the value of x increases i.e. B.E.P increases.
If the variable cost/unit i.e. Cv decreases. X decreases i.e. B.E.P decreases.
If the selling price i.e. Cs decreases the value of x increases i.e. B.E.P increases.
Therefore statements (1) and (3) are correct.
question-answer-faq-8927