Before a company reaches the breakeven point:
A) The total contribution margin is negative.
B) The contribution margin per unit is less than the fixed costs per unit.
C) Total fixed costs are increasing.
D) The contribution margin ratio is negative.

Question

Quizplus · Accepted Answer

Before a company reaches the breakeven point, the total contribution margin may be negative, but it is not always the case. The contribution margin per unit is less than the fixed costs per unit, which results in a negative net income. Total fixed costs may or may not be increasing, depending on the business's circumstances. The contribution margin ratio is also not necessarily negative before the breakeven point.

Before a Company Reaches the Breakeven Point