Question

Once sales reach the break-even point, each additional unit sold will: Group of answer choices reduce the margin of safety. increase the company's operating leverage. increase fixed cost by a proportionate amount. increase profit by an amount equal to the per unit contribution margin.

Answer 1

Once sales reach the break-even point, each additional unit sold will increase profit by an amount equal to the per unit contribution margin.

What is the break-even point?

Breakeven point is the point at which net income is zero. It is the point at which total cost is equal to total revenue.

Once the breakeven point has been exceeded, the company starts to earn a profit. Profit is earned when total revenue is greater than total cost.

Breakeven quantity = fixed cost / price – variable cost per unit

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