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If fixed costs increase, but variable cost and price remain the same, the break-even point: *decreases.increases.remains the same.may increase or decrease, depending on sales.

Question

If fixed costs increase, but variable cost and price remain the same, the break-even point: *decreases.increases.remains the same.may increase or decrease, depending on sales.

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Solution

Increases.

Here's why:

The break-even point is the point at which total revenue equals total costs. It's calculated by dividing fixed costs by the contribution margin per unit. The contribution margin per unit is the selling price per unit minus the variable cost per unit.

If fixed costs increase, but the selling price and variable costs remain the same, the contribution margin per unit doesn't change. However, because fixed costs are higher, you need to sell more units to cover those costs. Therefore, the break-even point increases.

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