00:01
Hello students, here is a question.
00:02
Ronnie company has budgeted the factory supervision and the salary will increase by 10 % if selling price and all other cost relations to held constant for the next year, the break even point would be.
00:14
So, we have an options given here, we have to choose the right option from this question.
00:19
The first question, the first option will be decreased by 10%, decreased by 10 % and the second option is increased by 10%, increased by 10 % and the third option is remain constant, remain constant and the fourth option is increased at a rate greater than 10%, increased at a rate greater than 10%.
01:06
So, first we need to understand what is break even point.
01:09
So, break even point is the level of sales which company neither makes profit nor loss.
01:15
In other words, it is a point where total revenue is equal to the total cost.
01:19
Now the ronnie company increases the factory supervisory salary by 10%, it means that the total cost of production will increase...