A Firm Is Reorganising and Reclassifying Its Cost Structure

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.

Correct Answer:

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