If Fixed Costs Rise While Other Variables Stay Constant

question 70

Multiple Choice

If fixed costs rise while other variables stay constant

• A) the breakeven point rises.
• B) degree of operating leverage increases.
• C) total profit declines.
• D) all of these

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Definitions:

Upstream Intra-Entity Profits

Profits realized from transactions between a parent company and its subsidiary, where the subsidiary sells to the parent.

Mutual Ownership

Refers to an arrangement where entities are owned by their members who share profits or benefits.

Consolidated Balance Sheet

A financial statement that shows the financial position of a parent company and its subsidiaries as if they were a single entity.

Treasury Stock Approach

A method in finance that accounts for repurchased shares of a company's own stock as treasury stock, reducing the total equity in the balance sheet.