Question

22. Factors which change the break-even point:
(A) Change in fixed costs
(B) Change in variable costs
(C) Change in the selling costs
(D) All of these​

Answer 1

Answer:

all of these are the factors which change the break-even point

Answer 2

(D) All of these factors can change the break-even point.

The break-even point (BEP) is the point where a company's production cost will be equal to the company's total revenue.

For example, the company ABC had a revenue of Rs 3,00,000 and the production cost also accounted for Rs 3,00,000, then the company ABC is said to achieve its break-even point without any loss.

The factors that can increase/decrease a company's BEP are:

• Changes in fixed costs of a company will lead to an increase in the BEP as the expenditure would change.
• An increase or change in the per unit variable cost will affect the production cost and hence, cause a change in the BEP.
• A decrease/increase or change in the company's selling costs would result in decreased/increased revenue, affecting the BEP.

Thus, all these factors would result in a change in the Break-even point.

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