CIMA BA2 · Chapter 10 · Question 10 of 12
If a company increases its selling price per unit while variable cost per unit and fixed costs remain unchanged, what happens to its breakeven point in units?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) It falls
Explanation
A higher selling price increases contribution per unit. Since breakeven units = fixed costs / contribution per unit, fewer units are needed to cover the same fixed costs.
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