Which of the following would take place if a company experienced an increase in fixed costs, all other things remaining constant?
A)The net income would increase.
B)The break-even point would increase.
C)The contribution margin would increase.
D)The contribution margin would decrease.
E)The break-even point would decrease.

Question

Quizplus · Accepted Answer

An increase in fixed costs would lead to an increase in the break-even point, i.e., the level of sales at which the company's total revenues equal its total costs. This is because fixed costs remain constant regardless of the level of output produced, and thus have to be covered by a larger amount of revenue. None of the other options are likely to occur.

Which of the Following Would Take Place If a Company