If Fixed Costs Increased and Variable Costs Per Unit Decreased

question 94

Multiple Choice

If fixed costs increased and variable costs per unit decreased, the break-even point would:

• A) increase
• B) decrease
• C) remain the same
• D) cannot be determined from the data provided

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Definitions:

Acid-Test Ratio

A financial metric used to evaluate a company's short-term liquidity position by dividing its most liquid assets by its current liabilities.

Current Ratio

A financial metric indicating a firm's capacity to fulfill its short-term debts, which are obligations due within the next year, by dividing its current assets by its current liabilities.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets, indicating the company's leverage level.

Inventory Turnover in Days

A metric that calculates the number of days it takes for a company to sell through its entire inventory, indicating the efficiency of inventory management.