Once the break-even point is reached,which of the following statements is true?
A) The total contribution margin changes from negative to positive.
B) Operating income will increase by the unit contribution margin for each additional item sold.
C) Variable expenses will remain constant in total.
D) The contribution margin ratio begins to decrease.

Question

Quizplus · Accepted Answer

Once the break-even point is reached, the company begins to generate profits. Operating income will increase by the unit contribution margin for each additional item sold above the break-even point. The total contribution margin changes from negative to positive at the break-even point. Variable expenses remain constant in total, but the contribution margin ratio stays constant rather than decreasing. Therefore, option B is the correct answer.

Once the Break-Even Point Is Reached,which of the Following Statements