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Breakeven point / net operating income

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Please help me with these two questions.

Thank you

1. If the variable expenses per toy chest increase as a percentage of the selling price will it result in a higher or lower break-even point?

2. How can current net operating income be increased under absorption costing without increasing sales? And, why?

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https://brainmass.com/business/upper-and-lower-bounds-of-options/breakeven-point-net-operating-income-169445

Solution Preview

1. If the variable expenses per toy chest increase as a percentage of the selling price will it result in a higher or lower break-even point?

Breakeven point = Fixed Cost/ Contribution Margin Ratio
Contribution Margin Ratio = 1- (variable Expense/Sales)
If the Variable expense increase as a percentage of selling price, the contribution margin ratio will fall. A decrease in the contribution margin ratio will increase the breakeven point.

The other way to think of it is, at breakeven total ...

Solution Summary

The solution explains the impact on breakeven point of a change in variable expenses and how net operating income can be increased without increasing the sales.

$2.19