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:

Capacity

The maximum output that an entity can produce under normal conditions over a certain period of time.