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?

Question

Quizplus · Accepted Answer

The break-even point will change because the mix of costs is changing (with a reduction in variable costs and an increase in fixed costs), but without specific figures, it's impossible to determine the direction of the change.

A Firm Is Reorganising and Reclassifying Its Cost Structure