Respuesta :
There would no change in the break-even point .
What is breakeven point?
It is the point at which the firm makes zero profit, I mean the number of units the firm needs to sell in order to cover all costs, such that revenue is the same as total costs.
Initially, breakeven point is the fixed costs divided by the contribution margin per unit(i.e. selling price minus variable cost per unit)
Let assume fixed cost is $100,000
Selling price=$40
variable cost=$20
Initial breakeven point=$100,000/($40-$20)
Initial breakeven point=5,000 units
Now selling price and variable cost would reduce by $4 each
breakeven point now=$100,000/($36-$16)
breakeven point now=5,000 units
Overall, the breakeven point would remain the same before the reduction in selling price and variable cost as well as after the reduction.
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