Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN: 9781337902571
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Textbook Question
Chapter 13, Problem 2Q
Would each of the following increase, decrease, or have an indeterminant effect on a firm’s break-even point (unit sales)?
- a. The sales price increases with no change in unit costs.
- b. An increase in fixed costs is accompanied by a decrease in variable costs.
- c. Variable labor costs decline; other things are held constant.
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Students have asked these similar questions
Which of the following is not an assumption of break-even analysis?
a. A company is operating within its relevant range of activity.
b. All costs are either variable or fixed.
c. Revenues and variable costs are constant per unit.
d. Contribution margin is the difference between selling price and total cost
per unit.
e. Fixed cost per unit decreases as volume increases.
Would an increase in variable costs per unit cause a company’s break-even point to increase or decrease? Explain why?
What happens to average fixed cost as more products are made?
a.
Remains the same
b.
Increases
c.
Decreases
d.
Fluctuates
Chapter 13 Solutions
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Ch. 13 - Changes in sales cause changes in profits. Would...Ch. 13 - Would each of the following increase, decrease, or...Ch. 13 - Discuss the following statement: All else equal,...Ch. 13 - If Congress increased the personal tax rate on...Ch. 13 - Which of the following would likely encourage a...Ch. 13 - Prob. 6QCh. 13 - Why is EBIT generally considered independent of...Ch. 13 - Is the debt level that maximizes a firm's expected...Ch. 13 - If a firm goes from zero debt to successively...Ch. 13 - Prob. 10Q
Ch. 13 - Prob. 11QCh. 13 - BREAK-EVEN ANALYSIS A company's fixed operating...Ch. 13 - Prob. 2PCh. 13 - RISK ANALYSIS a. Given the following information,...Ch. 13 - UNLEVERED BETA Hartman Motors has 18 million in...Ch. 13 - FINANCIAL LEVERAGE EFFECTS Firms HL and LL are...Ch. 13 - BREAK-EVEN ANALYSIS The Warren Watch Company sells...Ch. 13 - FINANCIAL LEVERAGE EFFECTS The Neal Company wants...Ch. 13 - HAMADA EQUATION Situational Software Co. (SSC) is...Ch. 13 - RECAPITALIZATION Tartan Industries currently has...Ch. 13 - BREAKEVEN AND OPERATING LEVERAGE a. Given the...Ch. 13 - RECAPITALIZATION Currently, Forever flowers Inc....Ch. 13 - BREAKEVEN AND LEVERAGE Wingler Communications...Ch. 13 - FINANCING ALTERNATIVES The Severn Company plans to...Ch. 13 - WACC AND OPTIMAL CAPITAL STRUCTURE Elliott...Ch. 13 - Prob. 1TCLCh. 13 - Prob. 2TCL
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- When sales price increases and all other variables are held constant, the break-even point will A. remain unchanged _________________________. B. increase C. decrease D. produce a lower contribution marginarrow_forwardWhen sales price decreases and all other variables are held constant, the break-even point will _______________________. A. remain unchanged B. increase C. decrease D. produce a higher contribution marginarrow_forwardWould an increase in variable costs per unit cause a company’s break-even point to increase or decrease? Why?arrow_forward
- The breakeven point decreases if: a. the variable cost per unit increases b. the contribution margin per unit decreases c.none of the given answers d. the selling price per unit increases . e. the total fixed costs increasearrow_forwardWhich of the following is true about the changes in fixed cost? An increase in production will result in an increase in per unit fixed cost. A decrease in fixed cost will result in an increase in variable cost. An increase in production will result in a decrease in per unit fixed cost. A decrease in production will result in an increase in total fixed cost.arrow_forward:Holding other factors constant, a company's contribution margin per unit will increase with All answers given are NOT correct .a O any increase in variable cost per unit .b O .any increase in quantity sold .c O any increase in the selling price per unit .d O increase in its total fixed costs .e Oarrow_forward
- Which of the following conditions would cause the break-even point to decrease? a. Increase in unit variable cost b. Decrease in unit selling price c. Decrease in unit variable cost d. Increase in total fixed costsarrow_forwardIf the percentage change in operating income resulting from a given percentagechange in sales is higher than the percentage change in sales itself, thena. an increase in the selling price would not alter the contribution marginper unit.b. variable costs per unit have increased.c. variable costs have decreased in total.d. the company has operating leverage.e. the company has no fixed costs.arrow_forwardWhich of the following conditions would cause the break-even point to increase? Oa. total fixed costs decrease Ob. unit selling price increases Oc. total fixed costs increase Od. unit variable cost decreasesarrow_forward
- On the costvolume - profit graph which of the following would result into a decrease in the breakeven point (Assuming other factors remain unchanged )? a. Decrease in number of units sold b.Decrease in selling price per unit c. Increase in fixed costs d. Decrease in variable cost per unit e. None of the given answersarrow_forwardWhen sales price increases and all other variables are held constant, the break-even point will ________.A. remain unchangedB. increaseC. decreaseD. produce a lower contribution marginarrow_forwardWhich of the following is true regarding the contribution margin ratio of a company that produces only a single product? Select one: a. The contribution margin ratio equals the selling price per unit less the variable expense ratio. b. The contribution margin per unit multiplied by the selling price per unit equals the contribution margin ratio. c. None of the given answer is correct. d. As fixed expenses decrease, the contribution margin ratio increases. e. The contribution margin ratio will decline as unit sales decline.arrow_forward
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