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.
Which of the following occurs if a company experiences a decrease in its fixed costs?
Select one:
O a. Income would decrease.
O b. The break-even point would decrease.
O c. The break-even point would increase.
O d. More than one of the answers would occur.
e. The contribution margin would decrease.
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 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_forwardWhen fixed costs decrease and all other variables remain unchanged, the break-even point will _______________. A. remain unchanged B. increase C. decrease D. produce a lower contribution marginarrow_forwardWhen should a segment be dropped? A. only when the decrease in total contribution margin is less than the decrease in fixed cost B. only when the decrease in total contribution margin is equal to fixed cost C. only when the increase in total contribution margin is more than the decrease in fixed cost D. only when the decrease in total contribution margin is less than the decrease in variable costarrow_forward
- Would an increase in variable costs per unit cause a company’s break-even point to increase or decrease? Explain why?arrow_forwardWould an increase in variable costs per unit cause a company’s break-even point to increase or decrease? Why?arrow_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
- Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: a. More than one of the answers would occur. b. The break-even point would increase. c. The break-even point would decrease. d. The contribution margin would decrease. e. Income would decrease.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_forwardWhich 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_forward
- If both the fixed costs associated with a product and the variable costs (as apercentage of sales dollars) decrease, what will be the effect on the contribution margin ratio and the break-even point, respectively?a. Decrease, increase.b. Increase, decrease.c. Decrease, decrease.d. Increase, increase.arrow_forwardWhich of the following describes the behavior of the fixed cost per unit? Decreases with decreasing production Decreases with increasing production Increases with increasing production Remains constant with changes in productionarrow_forwardThe breakeven point increases if : a the variable cost per unit decreases O b . the contribution margin per unit increase O c . the total fixed costs decrease O d none of the given answers O e . the selling price per unit decreasesarrow_forward
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