A Firm Is Reorganising and Reclassifying Its Cost Structure

question 45

Multiple Choice

A firm is reorganising and reclassifying its cost structure. What is the effect on the break-even point (if any) if direct labour costs are reduced and fixed indirect labour costs are increased, provided all other items remain unchanged?

• A) The break-even point will increase.
• B) The break-even point will decrease.
• C) The break-even point will change but without actual figures, it is impossible to say in what direction the change will be.
• D) It is not possible to determine whether the break-even point will change or will remain the same.

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