The Breakeven Point for a Service Organization Will Decrease If

question 20

Multiple Choice

The breakeven point for a service organization will decrease if:

• A) Volume increases
• B) The variable cost ratio decreases
• C) Fixed costs increase
• D) The contribution margin ratio decreases

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Definitions:

Net Income

The profit of a company after all expenses and taxes have been deducted from revenue.

Inventory

The goods and materials that a business holds for the ultimate goal of resale or processing.

Absorption Costing

An approach to calculating costs that encompasses all expenses related to production, including direct materials, direct labor, and all manufacturing overheads, whether they are variable or fixed, within a product's cost.

Variable Costing

A cost accounting method that only allocates variable production costs to products, while fixed costs are treated as period expenses.