Everything else remaining the same, an increase in fixed costs:
I. increases the break-even point based on NPV
II. increases the accounting break-even point
III. decreases the break-even point based on NPV
IV. decreases the accounting break-even point
A) I and III only
B) III and IV only
C) II and III only
D) I and II only

Question

Quizplus · Accepted Answer

An increase in fixed costs will increase both the break-even point based on NPV and the accounting break-even point. Therefore, statements I and II are true, while statements III and IV are false.

Everything Else Remaining the Same, an Increase in Fixed Costs