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Hello John,
I have a question.
Betis limited is considering changing the way it is structured by asking its employed staff to become freelance. Employees are currently paid fixed salary of 240000 per annum, but would instead be pays 200 per working day. on a typical working day, staff can produce 40 units. Other fixed cost are 400000 pa.
the selling price of a unit is 60 and material cost are 20 unit.what will be the effect of change on the breakeven point of the business and the level of operating risk?
I was doing that the two contribution was the same C= 60-20= 40
but on the solution the new contribution is C=60-20-5=35
I don’t understand why is -5 as well.thanks
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