Ruben, Inc

question 146

Multiple Choice

Ruben, Inc. is a management consulting firm specializing in pension plans. Its billing rate to clients is $120 per hour, and variable costs average $80 per hour. Fixed costs are $24,000 per month. The income tax rate is 20%.
If fixed costs increase by 10% and management increases its billing rate by 10%, what is the effect on the breakeven point, in billable hours?

• A) It increases the breakeven point
• B) The breakeven point will not change
• C) It decreases the breakeven point
• D) Cannot be determined