Discussion
If instead that firm's variable cost rises to 35, its break-even quantity becomes
Answer: A
Correct answer: 20 000 units
The contribution falls to \( 50 - 35 = 15 \), so
\[ Q_{BE} = \frac{300\,000}{15} = 20\,000 \ \text{units} \]A five rupee rise in variable cost has done exactly as much damage as a 100,000 rise in fixed cost did in the previous item - a useful comparison, since the variable cost change looks much the smaller of the two on the face of it.
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