Which of the following is/are true? Group of answer choices -all of the above are true...

Question

Question

Which of the following is/are true? Group of answer choices

-all of the above are true

-as the contribution margin increases,

-the break-even point decreases as the contribution margin decreases,

-the break-even point increases

-all of the above are false

-as fixed costs increase, DOL decreases

Answer 1

Answer #1

1: as the contribution margin increases,the break-even point decreases

2: as the contribution margin decreases, the break-even point increases.

BEP = Fixed costs/Contribution margin

Hence BEP and contribution margin are negatively related.

Higher fixed costs implies higher DOL and hence the last statement is false.

Answer 2

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