What is the effect on break-even level of revenues for each dollar of increase in fixed...

What is the effect on break-even level of revenues for each dollar of increase in fixed costs plus depreciation for a firm with 60 percent variable costs?

		An increase of $1.50
		An increase of $0.60
		An increase of $2.50
		An increase of $3.33

Expert Solution

Given,

Increase in fixed costs = $1

Variable cost percentage = 60% or 0.60

Solution :-

Increase in break even level of revenues = $1/(1 - variable costs percentage)

= $1/(1 - 0.60)

= $1/0.40 = $2.50

ANSWER : An increase of $2.50

jeff jeffy answered 2 years ago

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