COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If you increase Total Costs by 10% and increase Sales Revenue by 10% what would happen to the original break even point?
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It would stay the same
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It would increase
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It would decrease
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Explanation:
Detailed explanation-1: -The break-even point does not change when sales change. It remains the point at which revenue covers variable and fixed costs without any profit or loss. A company experiences a profit if sales surpass the break-even point and a loss if sales drop below it.
Detailed explanation-2: -The break-even point will increase by any of the following: An increase in the amount of the company’s fixed costs/expenses. An increase in the per unit variable costs/expenses. A decrease in the company’s selling prices.
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