ECONOMICS

Detailed explanation-1: -*Once the break-even point has been reached, net operating income will increase by the amount of the unit contribution margin for each additional unit sold. When sales are below the break-even point, the company suffers a loss.

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.

Detailed explanation-3: -Profit earned following your break even: Once your sales equal your fixed and variable costs, you have reached the break-even point, and the company will report a net profit or loss of $0. Any sales beyond that point contribute to your net profit.

Detailed explanation-4: -If the contribution margin is not sufficient to cover fixed expenses, there will be a net loss for the period.

Detailed explanation-5: -Calculate the operating income by subtracting your total fixed costs from the contribution margin, as they both appear on the contribution income statement. For example, if you have a contribution margin of $30, 000 and fixed costs of $5, 000, then you would have an operating income of $25, 000.