Breakeven volume rises as variable costs are converted into fixed costs.

Name: Breakeven volume rises as variable costs are converted into fixed costs.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When variable costs are converted into fixed costs, the total fixed costs increase while the variable costs decrease. This leads to a higher breakeven point, as a greater amount of sales (volume) is required to cover the fixed costs before the company begins to earn a profit.

Breakeven Volume Rises as Variable Costs Are Converted into Fixed