When the Level of Fixed Costs Is Decreased,the Break-Even Level

question 108

Multiple Choice

When the level of fixed costs is decreased,the break-even level of revenues:

• A) will automatically decrease.
• B) will automatically increase.
• C) may or may not be changed, depending on variable costs.
• D) will remain unchanged, because fixed costs cannot be altered.

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Definitions:

Transportation Costs

Expenses associated with moving goods or services from one location to another, including fuel, labor, and maintenance.

FOB Origin Pricing

The “free on board” (FOB) price the seller quotes that includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur (seller’s factory or warehouse).

Cost Of Loading

The expenses incurred in the process of loading goods onto a conveyance for transportation, such as labor, equipment, and material handling costs.

Trade-In Allowance

A discount or credit granted for the return of something old when purchasing something new.