On January 1, 2020, Randolph Co $\begin{array} {cc} & \text { Budgeted Break-even Point } & \text { Budgeted Margin of Safety } \\\end{array}$

question 99

Multiple Choice

On January 1, 2020, Randolph Co. increased its direct labor wage rates. All other budgeted costs and revenues were unchanged. How did this increase affect Randolph's budgeted break-even point and budgeted margin of safety? (CPA adapted)
$\begin{array} {cc} & \text { Budgeted Break-even Point } & \text { Budgeted Margin of Safety } \\\end{array}$
A. $\begin{array} {cc} &&&& \text { Increase } &&&&&&&&& \text { Increase } \\\end{array}$
B. $\begin{array} {cc} &&&& \text { Increase } &&&&&&&&& \text { Decrease } \\\end{array}$
C. $\begin{array} {cc} &&&& \text { Decrease } &&&&&&&&& \text { Decrease } \\\end{array}$
D. $\begin{array} {cc}&&&& \text { Decrease } &&&&&&&&& \text { Increase } \\\end{array}$

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Definitions:

Correlational Method

A statistical technique that measures the degree of the relationship between two variables, expressed by the correlation coefficient.

Psychological Makeup

The combination of emotional, mental, and personality characteristics that define an individual.

Stimulus Variable

An environmental, psychological, or physiological factor that can cause a change in the behavior or physiological state of an individual.

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