The Breakeven Sales Volume of the Encore Co

question 82

Multiple Choice

The breakeven sales volume of the Encore Co. is 800,000 units. If the variable cost per unit increases by $1.50 and the selling price per unit increases by $2 next year, then the new breakeven point will be:

• A) The same
• B) Higher
• C) Lower
• D) Cannot be determined

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Definitions:

Variable Costs

Costs that vary directly with the level of production, such as materials and labor.

MC

In economics, MC typically refers to Marginal Cost, which is the cost of producing one more unit of a good.

ATC

The total cost per unit of production, calculated by dividing the overall production cost by the number of units produced.

Production Function

A production function describes the relationship between inputs used in production and the output generated from those inputs.