If fixed expenses increase by $10,000 per year, then the sales needed to break even will generally increase by more than $10,000.

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Olivia Carlson · Accepted Answer

Final Answer : True, Explanation :  Fixed expenses are a part of the calculation of break-even point (BEP), which is the amount of sales required to cover all expenses and make zero profit. An increase in fixed expenses will increase the BEP. However, the increase in BEP will be more than $10,000 if the business has a low contribution margin (the difference between selling price and variable expenses) or if the fixed expenses were already a significant portion of the total expenses before the increase. On the other hand, if the business has a high contribution margin or the fixed expenses were a small portion of total expenses, then the increase in BEP may be less than $10,000.

If fixed expenses increase by $10,000 per year, then the sales needed to break even will generally increase by more than $10,000.

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