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

The correct option is Critical point control.

Explanation:

Critical Point Control is a key principle of management control based on the premise that it is neither economical nor easy to keep a check on each and every activity in an organization. Therefore, control should focus on Key Result Areas (KRAs) that are critical to the success of an organization.

In the given statement, a 5% increase in labor cost is considered more troublesome than a 15% increase in postal charges. This is because labor cost is a major expense (a critical point/Key Result Area) affecting overall profitability, whereas postal charges constitute a very minor expenditure for most businesses.

Why other options are incorrect:

• Deviation: Refers to the difference between actual performance and standard performance, but it does not represent the prioritization technique described.

• Break-even analysis: A technique used to determine the level of sales at which total revenues equal total costs (no profit, no loss).

• Critical path method: A project management technique used for scheduling and planning complex project activities.