If the fixed expenses of a product increase while variable expenses and the selling price remain constant,what will happen to the total contribution margin and the break-even point?
$\begin{array}{|l|l|l|}
\hline & \text { Contribution margin } & \text { Break-even point } \
\hline \text { A) } & \text { Increase } & \text { Decrease } \
\hline \text { B) } & \text { Decrease } & \text { Increase } \
\hline \text { C) } & \text { No change } & \text { Increase } \
\hline \text { D) } & \text { No change } & \text { No change } \
\hline
\end{array}$
A) Option A
B) Option B
C) Option C
D) Option D

Question

Quizplus · Accepted Answer

The contribution margin is the difference between the selling price of a product and its variable costs, so it remains unchanged if only fixed expenses increase. The break-even point, which is the point where total revenues equal total costs, will increase because higher fixed costs require more units to be sold to cover these costs.

If the Fixed Expenses of a Product Increase While Variable