A Manager Calculates Labor Cost Percentages for Both Fixed and Variable

question 14

Multiple Choice

A manager calculates labor cost percentages for both fixed and variable labor costs. If there are no staff pay raises, and the manager's sales increase by five percent, the fixed labor cost percentage should

• A) increase and the variable labor cost percentage should decrease.
• B) increase and the variable labor cost percentage should be unchanged.
• C) decrease and the variable labor cost percentage should increase.
• D) decrease and the variable labor cost percentage should be unchanged.

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Definitions:

Slope of the Budget Line

The rate at which a consumer can trade off one good for another while maintaining the same level of utility, representing the relative prices of two goods.

Risk

The possibility of loss, damage, or any other undesirable event.

Return

The profit or loss derived from an investment over a particular period, expressed either in percentage or absolute terms.

Tradeoff

A decision situation that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects.