The Strategy MOST Likely to Reduce the Break-Even Point Would

question 42

Multiple Choice

The strategy MOST likely to reduce the break-even point would be to:

• A)decrease the fixed costs and increase the contribution margin.
• B)decrease both the fixed costs and the contribution margin.
• C)increase the fixed costs and decrease the contribution margin.
• D)increase both the fixed costs and the contribution margin.

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Definitions:

Marginal Costs

The incremental cost associated with the production of one more unit of a service or product.

ATC

Average Total Cost, the sum of all production costs divided by the quantity of output produced, representing the per-unit cost of production.

AVC

Average Variable Cost, which is the total variable costs of production divided by the quantity of output produced.

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.