Break-even point decreases with lower fixed or variable costs at constant selling price

Steps:

• Recall break-even units = fixed costs / (selling price - variable cost per unit).
• With constant selling price, decreasing fixed costs lowers numerator, reducing break-even.
• With constant selling price, decreasing variable costs raises contribution margin, reducing break-even.
• Increasing fixed or variable costs raises break-even; other changes like sales volume don't directly affect it.

Why B is correct:

• Option B pairs decreasing variable costs (2) and decreasing fixed costs (3), both increasing contribution margin or lowering fixed costs per the formula.

Why the others are wrong:

• A includes increasing fixed costs (likely 1), which raises break-even.
• C includes irrelevant factor (likely 4, e.g., higher sales), not decreasing break-even.
• D pairs decreasing fixed costs (3) with irrelevant or increasing factor (4), not both effective.

Final answer: B