Which of the Following Would Cause the Break-Even Point to Change

question 48

Multiple Choice

Which of the following would cause the break-even point to change?

• A) An increase in fixed costs due to an addition to equipment
• B) An increase in the amount of inventory held
• C) A decrease in total production
• D) An increase in sales

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Definitions:

Matching Principle

An accounting principle that dictates expenses should be recognized in the same period as the revenues they helped generate.

Depletion

The accounting process of allocating the cost of natural resources over their productive life, used in industries like mining, timber, and oil extraction.

Estimated Lives

The expected period over which an asset is anticipated to be usable by the company, affecting depreciation and amortization calculations.

Salvage Values

The estimated residual value of an asset at the end of its useful life, determining its value when it can no longer be used for its primary purpose.