Question

Which of the following is not a recommendation the author of the Businesstown.com article makes to lower your break-even point?
a.
increase prices (4-5%)
b.
increase operational capital with a bank loan
c.
lower fixed expenses (phone, electric, advertising)
d.
lower direct costs (labor, purchasing, controlling, inventory)

Answer 1

b. Increasing operational capital with a bank loan — taking a loan raises fixed costs (interest/repayments) and would typically increase, not lower, the break-even point.