Assume a Product Costs $5 Each

Multiple Choice

Assume a product costs $5 each. The variable cost per unit is currently $4, and fixed costs are $25,000. If the company can alter its production method such that variable costs fall to $3.50 and fixed costs rise to $30,000, what will happen to the breakeven point?

A) It will fall.
B) It will rise.
C) It will remain the same.
D) It will rise and fall later.