Once the break-even point has been reached, increases in contribution margin will be reflected dollar for dollar in increased net income.

Question

Quizplus · Accepted Answer

This is because once the break-even point is reached, all fixed costs have been covered and any additional revenue generated will go straight towards increasing net income. As contribution margin represents the amount of revenue that is left over after variable costs have been covered, an increase in contribution margin will result in a corresponding increase in net income.

Once the Break-Even Point Has Been Reached, Increases in Contribution