Question

Diane owns a boutique specializing in ball gowns. Sales are stable and Diane feels it is time she had a 20 percent increase in her salary. If Diane takes this increase in compensation, it will decrease the break-even quantity of gowns she needs to sell on a monthly basis.A. TrueB. False

Answer 1

False

Step-by-step explanation:

Break Even Point is the point in a firm's operation, at which it earns total revenue just equal to cover its total cost. The firm neither earns profit, nor suffers loss in this situation.

Break Even Point : TR = TC ; Profit = 0

If Diane plans to increase her salary, the expenses of business firm increase. This means, the firm would have to generate more revenue to recover the new higher cost. So, the break even level of quantity increases in this case.