Once the Break-Even Point Is Reached

question 153

Multiple Choice

Once the break-even point is reached:

• A) the total contribution margin changes from negative to positive.
• B) net 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:

Good

An item or service that satisfies a want or need and is available for sale or exchange in the market.

Maximizing Utility

The economic principle that individuals or firms seek to achieve the highest level of satisfaction or benefit from their choices.

Marginal Utility

The increased enjoyment or value gained by a consumer from consuming an extra unit of a good or service.

Price

The amount of money required to purchase a good or service, which is determined by supply and demand.