Calzone Co. has budgeted salary increases to factory supervisors totaling 8%. If selling prices and all other cost relationships are held constant, next year's break-even point:
A) will decrease by 8%
B) will increase by 8%
C) cannot be determined from the data given
D) will increase at a rate greater than 8%

Question

Quizplus · Accepted Answer

The budgeted salary increases for factory supervisors will not directly affect the company's break-even point. The break-even point is determined by the relationship between fixed costs, variable costs, and selling prices. Without information on changes in these factors, it is impossible to determine how the break-even point will be affected.