Once the break-even point is reached:

Question

Quizplus · Accepted Answer

Once the break-even point is reached, every additional unit sold will bring in revenue greater than its variable cost, thus increasing the net operating income by the unit contribution margin. Option A is incorrect because the total contribution margin may be positive or negative before and after the break-even point, depending on the sales mix of products. Option C is incorrect because variable expenses increase proportionally with the number of units sold past the break-even point. Option D is incorrect because the contribution margin ratio remains constant, indicating the percentage of sales revenue that contributes to covering fixed costs and generating profit.

Once the Break-Even Point Is Reached