Heath Ltd Owns and Operates a Textile Manufacturing Plant

Multiple Choice

Heath Ltd owns and operates a textile manufacturing plant. Garments are sold for $40 each. The fixed plant and equipment costs are $51 600 per annum. Producing each garment incurs $15 of labour costs and $7.80 of material costs. If Heath Ltd's cost of plant and equipment increases, which of the following is true?

A) The contribution margin increases
B) Variable costs increases
C) The break-even point increases
D) No change occurs