Question

"Only a 5% increase in labor cost may be more troublesome than a 15% increase in postal charges."Identify the concept pointed out in the statement.

• A. Deviation
• B. Critical point control
• C. Break-even analysis
• D. Critical path method

Answer 1

The Correct Option is B

To identify the concept pointed out in the statement, let's analyze the statement and each option in detail:

Statement Analysis

The statement says, "Only a 5% increase in labour cost may be more troublesome than a 15% increase in postal charges." This suggests that there is a specific point (or threshold) at which a small change in one factor (labour cost) can have a more significant impact than a larger change in another factor (postal charges).

Options Analysis

Deviation (1)

Definition: Deviation refers to the difference between the actual performance and the set standards or expected performance.

Why Not: The statement is not about the difference between actual and expected performance but about the impact of changes in different factors.

Critical Point Control (2)

Definition: Critical point control is a concept in management where certain key points or thresholds in a process are identified and monitored closely. These points are critical because they can significantly affect the outcome.

Why Correct: The statement suggests that a small increase in labour cost (a critical point) can have a more significant impact than a larger increase in postal charges. This aligns with the concept of critical point control.

Break-even Analysis (3)

Definition: Break-even analysis is a financial tool used to determine the point at which revenue equals costs, resulting in no profit or loss.

Why Not: The statement is not about the break-even point but about the relative impact of changes in different costs.

Critical Path Method (4)

Definition: The critical path method is a project management technique used to determine the sequence of tasks and the minimum time required to complete a project.

Why Not: The statement is not about project management or the sequence of tasks but about the impact of changes in different costs.

The correct answer is: (2) Critical point control

The statement highlights the concept of critical point control by emphasizing that a small change in one factor (labour cost) can have a more significant impact than a larger change in another factor (postal charges). This suggests that certain points or thresholds in the cost structure are critical and need to be monitored closely.