If a company is currently operating at its breakeven point, which of the following
statements is true? (Income tax considerations are ignored.)
A)
If fixed costs increase, net income will decrease by the contribution margin ratio times the amount of the increase in fixed costs.
B)
If sales increase by 20%, net income will also increase by 20%, assuming fixed costs are not equal to zero.
C)
If variable costs double, net income will decrease by 50%.
D)
Net income will decrease by the decrease in number of units sold times the contribution margin per unit.
Solution
If a company is currently operating at its breakeven point, which of the following statements is true? (Income tax considerations are ignored.)
d) Net income will decrease by the decrease in number of units sold times the contribution margin per unit.
Note :
If fixed costs increase, net income will decrease by the amount increases in fixed costs
If sales increase by 20%, Contribution Margin will also increase by 20% and net income will also increase by 20% of Contribution Margin
If variable costs double, net income will decrease by what % cannot be calculated
Net income will decrease =Â Â decrease in number of units sold * contribution margin per unit.
.
If a company is currently operating at its breakeven point- which of t.docx
1. If a company is currently operating at its breakeven point, which of the following
statements is true? (Income tax considerations are ignored.)
A)
If fixed costs increase, net income will decrease by the contribution margin ratio times the
amount of the increase in fixed costs.
B)
If sales increase by 20%, net income will also increase by 20%, assuming fixed costs are not
equal to zero.
C)
If variable costs double, net income will decrease by 50%.
D)
Net income will decrease by the decrease in number of units sold times the contribution margin
per unit.
A)
If fixed costs increase, net income will decrease by the contribution margin ratio times the
amount of the increase in fixed costs.
B)
If sales increase by 20%, net income will also increase by 20%, assuming fixed costs are not
equal to zero.
C) If variable costs double, net income will decrease by 50%.
D)
Net income will decrease by the decrease in number of units sold times the contribution
margin per unit.
Solution
If a company is currently operating at its breakeven point, which of the following statements is
true? (Income tax considerations are ignored.)
2. d) Net income will decrease by the decrease in number of units sold times the contribution
margin per unit.
Note :
If fixed costs increase, net income will decrease by the amount increases in fixed costs
If sales increase by 20%, Contribution Margin will also increase by 20% and net income will
also increase by 20% of Contribution Margin
If variable costs double, net income will decrease by what % cannot be calculated
Net income will decrease =Â Â decrease in number of units sold * contribution margin per unit.
