diff --git a/packages/polaris-viz/src/components/FunnelChartNext/Chart.tsx b/packages/polaris-viz/src/components/FunnelChartNext/Chart.tsx
index 58b2493fd..712128643 100644
--- a/packages/polaris-viz/src/components/FunnelChartNext/Chart.tsx
+++ b/packages/polaris-viz/src/components/FunnelChartNext/Chart.tsx
@@ -25,7 +25,6 @@ import {SingleTextLine} from '../Labels';
 import {ChartElements} from '../ChartElements';
 
 import {FunnelChartXAxisLabels, Tooltip} from './components/';
-import {calculateDropOff} from './utilities/calculate-dropoff';
 import type {FunnelChartNextProps} from './FunnelChartNext';
 import {FunnelTooltip} from './components/FunnelTooltip/FunnelTooltip';
 import {
diff --git a/packages/polaris-viz/src/components/FunnelChartNext/tests/Chart.test.tsx b/packages/polaris-viz/src/components/FunnelChartNext/tests/Chart.test.tsx
new file mode 100644
index 000000000..5d798920c
--- /dev/null
+++ b/packages/polaris-viz/src/components/FunnelChartNext/tests/Chart.test.tsx
@@ -0,0 +1,113 @@
+import {mount} from '@shopify/react-testing';
+import {ChartContext} from '@shopify/polaris-viz-core';
+import type {DataSeries} from '@shopify/polaris-viz-core';
+import React from 'react';
+
+import {Chart} from '../Chart';
+import {FunnelChartConnector, FunnelChartSegment} from '../../shared';
+import {FunnelTooltip} from '../components/FunnelTooltip/FunnelTooltip';
+import {SingleTextLine} from '../../Labels';
+
+const mockData: DataSeries[] = [
+  {
+    name: 'Group 1',
+    data: [
+      {key: 'Step 1', value: 100},
+      {key: 'Step 2', value: 75},
+      {key: 'Step 3', value: 50},
+    ],
+  },
+];
+
+const mockContext = {
+  containerBounds: {
+    width: 500,
+    height: 300,
+    x: 0,
+    y: 0,
+  },
+};
+
+const defaultProps = {
+  data: mockData,
+  showConnectionPercentage: false,
+  tooltipLabels: {
+    dropoff: 'Dropoff',
+    total: 'Total',
+  },
+  xAxisOptions: {
+    hide: false,
+    labelFormatter: (value: string) => value,
+  },
+  yAxisOptions: {
+    labelFormatter: (value: number) => value.toString(),
+  },
+};
+
+describe('<Chart />', () => {
+  it('renders funnel segments for each data point', () => {
+    const chart = mount(
+      <ChartContext.Provider value={mockContext}>
+        <Chart {...defaultProps} />
+      </ChartContext.Provider>,
+    );
+
+    expect(chart).toContainReactComponentTimes(FunnelChartSegment, 3);
+  });
+
+  it('renders n-1 connectors for n funnel segments, excluding the last segment', () => {
+    const chart = mount(
+      <ChartContext.Provider value={mockContext}>
+        <Chart {...defaultProps} />
+      </ChartContext.Provider>,
+    );
+
+    expect(chart).toContainReactComponentTimes(FunnelChartConnector, 2);
+  });
+
+  it('formats labels using the provided formatters', () => {
+    const customFormatter = (value: string) => `Custom ${value}`;
+    const chart = mount(
+      <ChartContext.Provider value={mockContext}>
+        <Chart
+          {...defaultProps}
+          xAxisOptions={{
+            ...defaultProps.xAxisOptions,
+            labelFormatter: customFormatter,
+          }}
+        />
+      </ChartContext.Provider>,
+    );
+
+    expect(chart).toContainReactComponent(SingleTextLine, {
+      text: 'Custom Step 1',
+    });
+  });
+
+  it('shows tooltip when hovering over a segment', () => {
+    const chart = mount(
+      <ChartContext.Provider value={mockContext}>
+        <Chart {...defaultProps} />
+      </ChartContext.Provider>,
+    );
+
+    const firstSegment = chart.find(FunnelChartSegment);
+    firstSegment?.trigger('onMouseEnter', 0);
+
+    expect(chart).toContainReactComponent(FunnelTooltip);
+  });
+
+  it('hides tooltip when mouse leaves a segment', () => {
+    const chart = mount(
+      <ChartContext.Provider value={mockContext}>
+        <Chart {...defaultProps} />
+      </ChartContext.Provider>,
+    );
+
+    const firstSegment = chart.find(FunnelChartSegment);
+    firstSegment?.trigger('onMouseEnter', 0);
+    firstSegment?.trigger('onMouseLeave');
+
+    expect(chart).not.toContainReactComponent(FunnelTooltip); // Tooltip container
+  });
+});
diff --git a/packages/polaris-viz/src/components/FunnelChartNext/tests/FunnelChartNext.test.tsx b/packages/polaris-viz/src/components/FunnelChartNext/tests/FunnelChartNext.test.tsx
new file mode 100644
index 000000000..4f1f4c3d8
--- /dev/null
+++ b/packages/polaris-viz/src/components/FunnelChartNext/tests/FunnelChartNext.test.tsx
@@ -0,0 +1,127 @@
+import React from 'react';
+import {mount} from '@shopify/react-testing';
+import {
+  ChartState,
+  ChartContext,
+  DEFAULT_THEME_NAME,
+} from '@shopify/polaris-viz-core';
+import {act} from 'react-dom/test-utils';
+
+import {FunnelChartNext} from '../FunnelChartNext';
+import {Chart} from '../Chart';
+import {ChartSkeleton} from '../../ChartSkeleton';
+import {FunnelChartSegment} from '../../shared';
+import {FunnelConnector} from '../components';
+
+const mockData = [
+  {
+    name: 'Funnel',
+    data: [
+      {key: 'Step 1', value: 1000},
+      {key: 'Step 2', value: 750},
+      {key: 'Step 3', value: 500},
+      {key: 'Step 4', value: 250},
+    ],
+  },
+];
+
+const mockTooltipLabels = {
+  reached: 'Reached',
+  dropped: 'Dropped',
+};
+
+describe('<FunnelChartNext />', () => {
+  describe('rendering states', () => {
+    it('renders a Chart when state is Success', () => {
+      const funnel = mount(
+        <FunnelChartNext
+          data={mockData}
+          tooltipLabels={mockTooltipLabels}
+          state={ChartState.Success}
+        />,
+      );
+
+      expect(funnel).toContainReactComponent(Chart);
+    });
+
+    it('renders a ChartSkeleton when state is Loading', () => {
+      const funnel = mount(
+        <FunnelChartNext
+          data={mockData}
+          tooltipLabels={mockTooltipLabels}
+          state={ChartState.Loading}
+        />,
+      );
+
+      expect(funnel).toContainReactComponent(ChartSkeleton, {
+        type: 'Funnel',
+        state: ChartState.Loading,
+      });
+    });
+
+    it('renders a ChartSkeleton with error text when state is Error', () => {
+      const errorText = 'Something went wrong';
+      const funnel = mount(
+        <FunnelChartNext
+          data={mockData}
+          tooltipLabels={mockTooltipLabels}
+          state={ChartState.Error}
+          errorText={errorText}
+        />,
+      );
+
+      expect(funnel).toContainReactComponent(ChartSkeleton, {
+        type: 'Funnel',
+        errorText,
+        state: ChartState.Error,
+      });
+    });
+  });
+
+  describe('chart configuration', () => {
+    it('passes theme to Chart component', () => {
+      const funnel = mount(
+        <FunnelChartNext
+          data={mockData}
+          tooltipLabels={mockTooltipLabels}
+          theme={DEFAULT_THEME_NAME}
+          state={ChartState.Success}
+        />,
+      );
+
+      expect(funnel).toContainReactComponent(Chart);
+    });
+
+    it('passes xAxisOptions to Chart', () => {
+      const xAxisOptions = {hide: true};
+      const funnel = mount(
+        <FunnelChartNext
+          data={mockData}
+          tooltipLabels={mockTooltipLabels}
+          xAxisOptions={xAxisOptions}
+          state={ChartState.Success}
+        />,
+      );
+
+      expect(funnel).toContainReactComponent(Chart, {
+        xAxisOptions: expect.objectContaining({hide: true}),
+      });
+    });
+
+    it('passes yAxisOptions to Chart', () => {
+      const labelFormatter = (value: number) => `$${value}`;
+      const funnel = mount(
+        <FunnelChartNext
+          data={mockData}
+          tooltipLabels={mockTooltipLabels}
+          yAxisOptions={{labelFormatter}}
+          state={ChartState.Success}
+        />,
+      );
+
+      expect(funnel).toContainReactComponent(Chart, {
+        yAxisOptions: expect.objectContaining({labelFormatter}),
+      });
+    });
+  });
+});
diff --git a/packages/polaris-viz/src/hooks/tests/useFunnelBarScaling.test.tsx b/packages/polaris-viz/src/hooks/tests/useFunnelBarScaling.test.tsx
new file mode 100644
index 000000000..51e325f74
--- /dev/null
+++ b/packages/polaris-viz/src/hooks/tests/useFunnelBarScaling.test.tsx
@@ -0,0 +1,118 @@
+import type {Root} from '@shopify/react-testing';
+import {mount} from '@shopify/react-testing';
+import {scaleLinear} from 'd3-scale';
+import React from 'react';
+
+import {
+  useFunnelBarScaling,
+  SCALING_RATIO_THRESHOLD,
+  MINIMUM_SEGMENT_HEIGHT_RATIO,
+} from '../useFunnelBarScaling';
+
+const mockYScale = scaleLinear().domain([0, 100]).range([0, 400]);
+
+function parseData(result: Root<any>) {
+  return JSON.parse(result.domNode?.dataset.data ?? '');
+}
+
+describe('useFunnelBarScaling', () => {
+  it('returns shouldApplyScaling=false when ratio above threshold', () => {
+    function TestComponent() {
+      const data = useFunnelBarScaling({
+        yScale: mockYScale,
+        values: [90, 100],
+      });
+
+      return <span data-data={`${JSON.stringify(data)}`} />;
+    }
+
+    const result = mount(<TestComponent />);
+    const data = parseData(result);
+
+    expect(data.shouldApplyScaling).toBe(false);
+  });
+
+  it('returns shouldApplyScaling=true when ratio below threshold', () => {
+    function TestComponent() {
+      const data = useFunnelBarScaling({
+        yScale: mockYScale,
+        values: [5, 100],
+      });
+
+      return <span data-data={`${JSON.stringify(data)}`} />;
+    }
+
+    const result = mount(<TestComponent />);
+    const data = parseData(result);
+
+    expect(data.shouldApplyScaling).toBe(true);
+  });
+
+  describe('getBarHeight', () => {
+    it('returns original height when scaling not needed', () => {
+      function TestComponent() {
+        const data = useFunnelBarScaling({
+          yScale: mockYScale,
+          values: [90, 100],
+        });
+
+        const height = data.getBarHeight(90);
+        return <span data-data={`${JSON.stringify({height})}`} />;
+      }
+
+      const result = mount(<TestComponent />);
+      const data = parseData(result);
+
+      expect(data.height).toBe(mockYScale(90));
+    });
+
+    it('returns scaled height when scaling needed', () => {
+      function TestComponent() {
+        const data = useFunnelBarScaling({
+          yScale: mockYScale,
+          values: [5, 100],
+        });
+
+        const scaledHeight = data.getBarHeight(5);
+        const originalHeight = mockYScale(5);
+        const tallestHeight = mockYScale(100);
+
+        return (
+          <span
+            data-data={`${JSON.stringify({
+              scaledHeight,
+              originalHeight,
+              tallestHeight,
+            })}`}
+          />
+        );
+      }
+
+      const result = mount(<TestComponent />);
+      const data = parseData(result);
+
+      expect(data.scaledHeight).toBeGreaterThan(data.originalHeight);
+      expect(data.scaledHeight).toBeLessThan(data.tallestHeight);
+      expect(data.scaledHeight / data.tallestHeight).toBeGreaterThanOrEqual(
+        MINIMUM_SEGMENT_HEIGHT_RATIO,
+      );
+    });
+
+    it('returns original height for tallest bar even when scaling applied', () => {
+      function TestComponent() {
+        const data = useFunnelBarScaling({
+          yScale: mockYScale,
+          values: [5, 100],
+        });
+
+        const height = data.getBarHeight(100);
+        return <span data-data={`${JSON.stringify({height})}`} />;
+      }
+
+      const result = mount(<TestComponent />);
+      const data = parseData(result);
+
+      expect(data.height).toBe(mockYScale(100));
+    });
+  });
+});