Once the Break-Even Point Is Reached,which of the Following Statements

question 21

Multiple Choice

Once the break-even point is reached,which of the following statements is true?

• A) The total contribution margin changes from negative to positive.
• B) Operating income will increase by the unit contribution margin for each additional item sold.
• C) Variable expenses will remain constant in total.
• D) The contribution margin ratio begins to decrease.

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Definitions:

Inventory Valuation

The method used to assign value to a company's inventory, including raw materials, work-in-progress, and finished goods, affecting cost of goods sold and net income.

Year-End Inventory

The total value of all inventory that a company has in stock at the end of its fiscal year.

Consignment

A business arrangement where goods are left with a third party to sell, but the ownership remains with the supplier until the goods are sold.

FOB Shipping Point

A term indicating that the buyer of goods takes ownership and is responsible for the freight charges at the time the goods leave the seller's shipping point.