Which of the following occurs if a company experiences an increase in its ﬁxed costs?

Question

Quizplus · Accepted Answer

An increase in fixed costs will lead to an increase in the break-even point, as the company will need to generate more revenue to cover its fixed costs before earning a profit. The other choices are incorrect; net income would decrease because of the increased fixed costs, the contribution margin would remain unchanged unless there is a change in the sales mix or pricing strategy, and the contribution margin would not decrease as fixed costs have no direct impact on it.

Which of the Following Occurs If a Company Experiences an Increase