source : yahoo.com
If fixed costs rise while other variables stay constant?
Although I’m in partial agreement with the “study yourself” answer. I’ll answer it anyway.
The answer is d. all the above.
[ a. the break point rises because you need to sell more to achieve in your costs in terms of revenue)
b. operating leverage is the rate at which a change in sales or revenue translates into change in operating income. This is higher if fixed costs are a higher percentage of total costs
c. And of course a rise in costs will lead to a decrease in profits.]
Chapter 7 Accounting Flashcards | Quizlet – If all other factors are constant, any decrease in fixed costs will decrease the breakeven point. If the variable cost per unit increases while the sale price per unit and total fixed costs remain constant, which of the following statements is true?Operating Income would decrease by $10 due to the 10% depreciation charge each year, and the $10 in additional Interest Expense would decrease the Pre-Tax Income by $20 altogether ($10 After 2 years, the value of the factories is now $80 if we go with the 10% depreciation per year assumption.Decreasing returns to scale are also referred to as diseconomies of scale. Examples of industries that exhibit decreasing returns to scale include companies engaged in exploration of natural resources (because it becomes increasingly difficult to extract as easier low-hanging minerals are extracted)…
Accounting Interview Questions & Answers (Basic) – The breakeven point tells you how many units you must sell to cover your fixed and variable production costs. Calculating your break-even point is the kind of math even the most math-challenged small-business owner can do – and arguably should be able to do for those inevitable…Break Even Analysis in economics, financial modeling, and cost accounting refers to the point in which total cost and total revenue are equal. For example, if the company sells 0 units, then the company would incur $0 in variable costs but $100,000 in fixed costs for total costs of $100,000.Beak-even point (BEP) in business is the point at which total cost and total revenue are equal. There is no net gain or loss, and one has "broken even", though opportunity costs have been paid and From the above formula we can conclude that: When Fixed costs reduces, the BEP decreases.
Returns to Scale | Types and Examples | Decreasing Returns to Scale – The breakeven point doesn't typically factor in commission costs, although these fees could be included if desired. Assume a company has $1 million in fixed costs and a gross margin of 37%. Generally, to calculate the break even point in business, fixed costs are divided by the gross profit…(In contrast, any decrease in the money supply or decrease in the growth rate of the money supply is referred to as contractionary monetary policy.) Of increase, decrease, or stay the same, the effect on the equilibrium interest rate when the nominal money supply increases, ceteris paribus.At Bahama Foods, the break-even point is 1,600 units. If fixed costs total $44,000 and variable costs are $12 per unit, what is the selling price per unit? Splurge is considering the purchase of new equipment that would increase fixed costs to $48,700, but decrease the variable costs per unit by $5.