If a Firm's Fixed Operating Costs Decrease, the Firm's Operating

question 101

Multiple Choice

If a firm's fixed operating costs decrease, the firm's operating breakeven point will

• A) decrease.
• B) increase.
• C) remain unchanged.
• D) change in an undetermined direction.

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Definitions:

Direct Labor

The wages paid to workers directly involved in the production of goods or services.

Intangible Asset

An asset that lacks physical substance but provides future economic benefits, such as intellectual property, goodwill, and brand recognition.

Amortization

The gradual reduction of a debt or the spreading of the cost of an intangible asset over its useful life.

Asset Turnover

An efficiency indicator that evaluates how a company's assets are used to produce revenue from sales.