Question 12.RQ.28: Tick the correct boxes. A company makes and sells a single p...

Tick the correct boxes.
A company makes and sells a single product. If the fixed costs incurred in making and selling the product increase:

Increase Decrease Stay the same
a) the breakeven point will \square \square \square
(b) the contribution to sales ratio will \square \square \square
(c) the margin of safety will \square \square \square
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● For a given level of sales, the margin of safety and the breakeven point will always move in the ‘ opposite direction ’ to each other. If one increases then the other decreases.
● The contribution to sales ratio is not affected by the level of fixed costs incurred.
(a) The breakeven point will increase.
(b) The contribution to sales ratio will stay the same.
(c) The margin of safety will decrease.

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