InterviewSolution
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What Increases A Break-even Point? |
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Answer» The break-even point will INCREASE when the amount of fixed costs and expenses INCREASES. The break-even point will also increase when the variable expenses increase WITHOUT a corresponding increase in the selling PRICES. A company with many products can see its break-even point increase when the mix of products changes. In other words, if a GREATER proportion of lower contribution margin products are sold, the break-even point will increase. (Contribution margin is selling price minus variable expenses.) The break-even point will increase when the amount of fixed costs and expenses increases. The break-even point will also increase when the variable expenses increase without a corresponding increase in the selling prices. A company with many products can see its break-even point increase when the mix of products changes. In other words, if a greater proportion of lower contribution margin products are sold, the break-even point will increase. (Contribution margin is selling price minus variable expenses.) |
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