If Fixed Costs Increased and Variable Costs Per Unit Decreased

question 220

Multiple Choice

If fixed costs increased and variable costs per unit decreased, the break-even point

• A)would increase
• B)would decrease
• C)would remain the same
• D)cannot be determined from the data given

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Definitions:

Variable Costing

An accounting technique that involves only variable costs like direct materials, direct labor, and variable manufacturing overhead in the costing of products.

Absorption Costing

A method of accounting that incorporates all costs related to manufacturing—including direct materials, direct labor, and all manufacturing overheads, whether fixed or variable—into the product's cost.

Carrying Value

The book value of an asset on a balance sheet, representing its acquisition cost minus depreciation or amortization.

Ending Inventory

The value or quantity of stock and materials a company has at the end of a financial period.