Would each of the following increase, decrease, or have an indeterminant 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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  1. Think it through. What do you think. Take a shot.

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  2. A new firm decides to use MACRS depreciation for both book and tax purposes rather than the straight-line depreciation method.

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