If a company experiences an increase in rent expense,the total cost line on the cost-volume-profit graph will:
A) shift upward, and the break-even point will shift downward.
B) shift upward, and the break-even point will also shift upward.
C) shift upward and have a steeper slope, and the break-even point will also shift upward.
D) shift upward and have a flatter slope, and the break-even point will be unchanged.

Question

Quizplus · Accepted Answer

An increase in rent expense, which is a fixed cost, causes the total cost line on a cost-volume-profit graph to shift upward because the company will incur higher costs at all levels of production. This shift results in a higher break-even point because the company needs to generate more revenue to cover the increased costs.

If a Company Experiences an Increase in Rent Expense,the Total