If Fixed Costs Increase by 10% and Management Increases Its

question 1

Multiple Choice

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

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Definitions:

Combustion

A chemical process involving the rapid combination of a substance with oxygen to produce heat and light, often resulting in fire or explosion.

Heat

A form of energy transfer between two substances or systems due to a temperature difference.

Vaporization

The process by which a liquid or solid substance turns into a gas, often as a result of heating.

Combustible

Capable of catching fire and burning; a characteristic of materials that can ignite under certain conditions, releasing energy and heat.