Fixed costs are
A) assumed to be linearly increasing in the break-even model
B) incurred even if zero units are produced
C) equal to variable costs at the break-even point
D) none of the above

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not change regardless of the level of production, and are incurred even if zero units are produced. Choice A is incorrect because fixed costs are assumed to be constant in the break-even model, not linearly increasing. Choice C is incorrect because fixed costs remain fixed and do not become equal to variable costs at the break-even point.

Fixed Costs Are