Finance and economy?

Question

Would each of the following increase, decrease, or have an indeterminant effect on a

firm’s breakeven point (unit sales)?

a. An increase in the sales price with no change in unit costs.

b. An increase in fixed costs accompanied by a decrease in variable costs.

c. A new firm decides to use MACRS depreciation for both book and tax purposes

rather than the straight-line depreciation method.

d. Variable labor costs decline; other things are held constant.

Answer 1

A - no change (it will change sales volume but not location of break-even).

B - result unknown - depends on quantitative changes in fixed and variable costs.

C - no change.

D - decrease of break-even point (move it toward origin)

Answer 2

a. Increase, also depends on the sales before and after the sales price increase

b. Indeterminant truely depends on how much of an increase in the fixed cost and how much of a decrease in the variable costs

c.Do not no this one dont quit get what either of those mean

d.This would increase the breakevan point unless this Variable labor cost had a decline because of lay offs which would in turn would allow the firm to do less work.

Hope that answers your question. =]