If the Fixed Expenses of a Product Increase While Variable

question 305

Multiple Choice

If the fixed expenses of a product increase while variable expenses and the selling price remain constant,what will happen to the total contribution margin and the break-even point?

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Noncash Expense

Expenses that do not directly result in a physical outflow of cash but are recorded in the accounting records, such as depreciation.

Depreciation

The methodical distribution of the expense of a physical asset across its lifespan.

Plant Assets

Tangible assets used in a company's operations that have a useful life of more than one year.

Notes Payable

A written agreement to pay a specified amount, usually including interest, by a certain date.