Breakeven point
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Would each of the following increase, decrease, or have an indeterminate effect on a firm's breakeven point (unit sales)?
a. An increase in the sales price with no change in unit costs.
b. An increase in fixed costs accompanied by a decrease in variable costs.
c. A new firm decides to use MACRS depreciation for both book and tax purposes rather than the straight-line depreciation method.
d. Variable labor costs decline; other things are held constant.
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Answers a question on a firm's breakeven point.
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Would each of the following increase, decrease, or have an indeterminate effect on a firm's breakeven point (unit sales)?
Breakeven Point (BEV) = Total Fixed Cost /(Selling Price per unit - Variable Costs per unit)
a. An increase in the sales price with no change in unit costs.
Decrease
Since (BEV) = Total Fixed Cost / (Selling Price per unit - Variable ...
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