If fixed costs were to double unexpectedly, the break-even point would be
A)unaffected.
B)doubled.
C)halved.
D)increased by a factor of four.

Question

Quizplus · Accepted Answer

Fixed costs are one of the components of the break-even point formula. If fixed costs were to double, it would increase the break-even point. This is because the break-even point is the point at which total revenue equals total costs, and if one of the costs increases, then the break-even point must also increase. Thus, if fixed costs were to double unexpectedly, the break-even point would also double.

If Fixed Costs Were to Double Unexpectedly, the Break-Even Point