Business FinancesQuestion 1121 of 1632
If a contractor's fixed costs rise while his contribution margin ratio stays the same, the break-even point will:
a.Increase
b.Stay the same
c.Decrease
d.Become zero
Explanation
Break-even revenue = fixed costs / contribution margin ratio. Raising the numerator (fixed costs) while holding the ratio constant increases the break-even sales volume: he must sell more just to cover the higher fixed costs.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)