21. Decreasing a company\'s fixed expenses will reduce the break-even point. A.

Question

21. Decreasing a company's fixed expenses will reduce the break-even point.
A. True
B. False

22. Increasing a company's sales will reduce the break-even point.
A. True
B. False

23. Decreasing a company's variable expenses will reduce the break-even point.
A. True
B. False

24. A product with a high gross profit could still be an unprofitable product.
A. True
B. False

25. Fixed expenses are best described as expenses that remain the same
A. in total even when activity triples
B. in total within a reasonable change in activity
C. on a per unit basis as activity changes

Explanation / Answer

21. Break-even = fixed expenses / (sales price - variable expenses) Decreasing that will decrease the break-even point. TRUE 22. Increasing the sales price will reduce the break-even point, but I'm not sure if increasing the amount of sales alone would reduce the break-even point. B. FALSE 23. Decreasing variable expenses will reduce the break-even point. TRUE 24. A product with high gross profit could still be unprofitable TRUE - because it may have fixed costs that exceed the gross profit 25. B - Fixed expenses are usually level on a timely basis.

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