American Bankers Association Exam CTFA Topic 8 Question 38 Discussion

Actual exam question for American Bankers Association's CTFA exam

Question #: 38
Topic #: 8

[All CTFA Questions]

In the context of operating leverage break-even analysis, if selling price per unit rises and all other variables remain constant, the operating break-even point in units will:

AFall

BRise

CStay the same

DStill be indeterminate until interest and preferred dividends paid are known

Show Suggested Answer

Suggested Answer: B

by Danica at Oct 25, 2022, 11:16 PM

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Toshia

2 days ago

I see both points, but I think the answer is B) Rise because if selling price per unit rises, we need to sell more units to cover our fixed costs, increasing the break-even point.

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Jettie

4 days ago

I disagree, I believe the answer is C) Stay the same because the operating break-even point is not affected by changes in selling price, only by changes in fixed costs and variable costs.

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Justa

4 days ago

I think the answer is A) Fall because if selling price per unit rises, we need to sell fewer units to cover our fixed costs.

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