- If sales volume increases, and all other factors remain unchanged, the contribution margin ratio will decrease.
- The break-even point for a capital intensive, automated company will tend to be higher than for a less capital intensive company while the margin of safety will tend to be lower.
- An increase in the number of units sold will decrease a company’s break-even point.
- Assuming that the unit contribution margin is positive, a 10% decrease in selling price will increase the break-even point in terms of unit sales more than will a 10% increase in the variable expense.
- The break-even point is the point where total contribution margin equals total variable expenses.
