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How does an increase in income tax rate effect the breakeven point?
No, an increase in the tax rate only affects a positive income; at break even there is no amount to tax
What is the relationship between income and expenses before a break-even point is reached?
Before the break even point, total expenses exceed total income and there is a loss made.
What happens to the break even point if fixed costs increase but variable cost and price remain the same?
the break even point goes up
What causes the break even point to increase or decrease?
The break-even point increases when fixed costs increase or selling price decreases. It decreases when fixed costs decrease or selling price increases. Changes in variable costs or sales volume can also impact the break-even point.
Will an increase in units sold decrease the break even point?
No, an increase in units sold will not decrease the break-even point; rather, it can help a business reach the break-even point more quickly. The break-even point is determined by fixed costs divided by the contribution margin per unit. While selling more units increases total revenue and can lead to profits, the break-even point itself remains constant unless there are changes in fixed costs or the contribution margin.
What is the level of sales at which revenues equal expenses and net income is zero?
Break even point!
A firm's break-even point will rise if?
A firm's break-even point will rise if its fixed costs increase, as this requires more sales to cover the higher expenses. Additionally, if the selling price per unit decreases, the break-even point will also increase since more units must be sold to cover the same fixed costs. Conversely, an increase in variable costs per unit will also raise the break-even point, requiring more sales to achieve profitability.
How much will profits increase for every unit sold over the break-even point?
All units sold above the break even point will be a profit equal to the contribution margin.
How does the break even point change when you change the cost?
The break-even point changes inversely with fixed costs and directly with variable costs. If fixed costs increase, the break-even point rises, meaning more units must be sold to cover expenses. Conversely, if variable costs increase, the break-even point also increases, as each unit contributes less to covering fixed costs. Reducing costs, either fixed or variable, lowers the break-even point, allowing fewer sales to achieve profitability.
What is The level of sales at which revenues equal expenses and net income is zero called?
break even point
What will happen to a company's break even point if the sales price and unit variable cost of its only product increases by the same dollar amount?
the break even increase
Is it true that in general an increase in price increases the break even point if all costs are held constant?
No
