In a break-even problem what would be expected to happen to the break-even quantity if the fixed cost is increased (assume fixed and variable costs remain constant)?
A) Increase
B) Decrease
C) Neither increase nor decrease
D) Impossible to know how break-even quantity would change

Question

Quizplus · Accepted Answer

The break-even quantity is the quantity where total revenue equals total cost, which is equal to fixed cost plus variable cost per unit times the quantity. If the fixed cost increases, the break-even point will shift to the right, meaning that the quantity at which total revenue equals total cost will increase. Therefore, choice A is correct.

In a Break-Even Problem What Would Be Expected to Happen