At a Sales Level of 20,000 Units,Pony Corp

question 72

Multiple Choice

At a sales level of 20,000 units,Pony Corp.has sales of $400,000,a variable cost ratio of 60%,and a profit of $40,000.What is the break-even point in units?

• A)8,000
• B)12,000
• C)15,000
• D)20,000

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Definitions:

Underapplied Overhead

A situation where the actual manufacturing overhead costs are higher than the allocated costs during a period.

Direct Labor Cost

The total cost of wages for employees who work directly on the manufacturing of products or delivery of services.

Overapplied Overhead

A scenario in which the overhead costs assigned for manufacturing surpass the real overhead costs that were incurred.

Actual Overhead Costs

The real costs incurred for overhead in a specific period, as opposed to budgeted or standard overhead costs.