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

Question

Quizplus · Accepted Answer

If a company experiences a decrease in its fixed costs, the break-even point would decrease. This is because the break-even point is the sales level at which a company's total revenue equals its total costs, and a decrease in fixed costs means it would take less sales revenue to cover those costs and reach the break-even point. The other options are incorrect as a decrease in fixed costs would not directly result in a decrease in income or an increase/decrease in contribution margin.

Which of the Following Occurs If a Company Experiences a Decrease