Charlotte Co. has budgeted salary increases to factory supervisors totaling 9%. If selling prices and all other cost relationships are held constant, next year's break-even point

a. cannot be determined from the data given
b. will increase by 9%
c. will increase at a rate greater than 9%
d. will decrease by 9%

a.cannot be determined from the data given

Explanation:

As we already know that

The break even point is the point at which the firm has no profit or no loss i.e means neither the firm is earning profit nor the firm suffered from any losses

In mathematically,

Break even point is

= No loss = profit

Now in the given case, since the budgeted salary increases to factory supervisors i.e 9% so the next year break even point cannot be determined as no fixed cost is given, no selling price or sales revenue and no variable cost per unit or variable cost is given so that the contribution margin per unit or contribution margin ratio could arrive

As

Break even point in units is

= Fixed cost ÷ Contribution margin per unit

where,

Contribution margin per unit = Selling price per unit - variable cost per unit

And, the break even point in dollars is

= Fixed cost ÷ contribution margin ratio

where,

Contribution margin ratio is

= (Contribution margin per unit or contribution margin) ÷ (Sales or selling price per unit) × 100

answer; conceptual skills;