If fixed costs decreases while other variables stay constant:
A) the break-even point increases.
B) degree of operating leverage increases.
C) total profit decrease.
D) total profit increases.

Question

Quizplus · Accepted Answer

If fixed costs decrease while other variables stay constant, the total cost curve will shift downwards. This means that the break-even point decreases, which allows the company to sell fewer units and still cover its fixed costs. This results in an increase in total profit.

If Fixed Costs Decreases While Other Variables Stay Constant