If a firm's fixed operating costs decrease, the firm's operating breakeven point will
A) decrease.
B) increase.
C) remain unchanged.
D) change in an undetermined direction.

Question

Quizplus · Accepted Answer

If a firm's fixed operating costs decrease, the contribution margin per unit will increase. This increased contribution margin per unit means that the firm will need to sell fewer units in order to cover its fixed costs, which lowers the breakeven point. Hence, the firm's operating breakeven point will decrease.

If a Firm's Fixed Operating Costs Decrease, the Firm's Operating