Business FinancesQuestion 1121 of 1605
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.
Practice all 1605 questions free — no signup required.
Related questions on this topic
- A contractor's fixed (overhead) costs are $60,000/year. Each job nets $2,000 of contribution margin. How many jobs must he complete to break even?
- The break-even point is best defined as the level of sales at which:
- A contractor has $100,000 fixed costs and a contribution margin ratio of 25%. If he wants a $50,000 profit, what revenue is required?
- A framing job needs 3,200 board feet of lumber at $0.85 per board foot, plus 40 labor hours at $45/hour. What is the estimated direct cost?
- A contractor estimates a job at 120 labor hours. Actual hours worked were 150. By what percentage did labor hours exceed the estimate?
- The primary purpose of JOB COSTING is to:
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)