What Happens to the Break-Even Point in Sales Dollars When

question 129

Multiple Choice

What happens to the break-even point in sales dollars when the contribution margin ratio increases?

• A) Break-even point increases.
• B) Break-even point decreases.
• C) Break-even point stays the same.
• D) Not enough information to answer the question.

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Definitions:

Intra-Entity Bonds

Intra-entity bonds refer to bonds issued between entities within the same corporate group, used for internal financing purposes.

Straight-Line Method

The straight-line method is a way of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee, usually through ownership of 20-50% of voting stock.

Bonds Payable

Long-term liabilities represented by promissory notes issued by a company to borrow funds, repayable at a specified future date along with interest.