Everything Else Remaining the Same, an Increase in Fixed Costs

question 58

Multiple Choice

Everything else remaining the same, an increase in fixed costs:
I. increases the break-even point based on NPV
II. increases the accounting break-even point
III. decreases the break-even point based on NPV
IV. decreases the accounting break-even point

• A) I and III only
• B) III and IV only
• C) II and III only
• D) I and II only

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a company's assets over their useful lives.

Financial Statement

An official document detailing the monetary transactions and status of an organization, individual, or different entity.

Income Statement

A financial report that shows the company's revenues and expenses over a specific period, resulting in a net income or loss.

Trial-balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns that are equal, used to ensure the accuracy of financial transactions.