If fixed costs increase,and all other factors remain the same,the margin of safety will become larger.

Question

Quizplus · Accepted Answer

When fixed costs increase, the breakeven point increases as well. This means that the level of sales needed to cover all costs increases and the margin of safety (the difference between actual sales and the breakeven point) decreases. So, the statement is false, the margin of safety will become smaller, not larger.

If Fixed Costs Increase,and All Other Factors Remain the Same,the