The Total Fixed Cost of Production in a Manufacturing Company

question 9

Multiple Choice

The total fixed cost of production in a manufacturing company is $50,000.The company sells its products at $15 and the variable costs associated with each unit sold is $10.Calculate the level of production at which the firm breaks even.

• A)15,000 units
• B)10,000 units
• C)5,000 units
• D)1,000 units
• E)20,000 units

---

Definitions:

Prepaid Rent Expense

An accounting term for rent payments made in advance of the rental period, recorded as an asset on the balance sheet until the period of use.

Adjustment

The process of making entries to correct accounts or to allocate amounts properly at the end of an accounting period.

Office Equipment

Assets like computers, desks, chairs, and printers that are used in an office setting for the operation of the business.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life.