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A rise in fixed cost, other things equal, moves the break-even point

  • A.downward
  • B.not at all
  • C.downward if the contribution ratio is high
  • D.upward

Answer: D

More contribution must be earned before the larger fixed cost is covered, so more units have to be sold. The slope of the total cost line is unchanged and only its intercept rises, which is the signature of a fixed cost change.

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