A Firm with $50,000 in Fixed Costs, Selling Price of $25

question 125

Multiple Choice

A firm with $50,000 in fixed costs, selling price of $25 per unit, and variable costs of $5 a unit has a breakeven volume of:

• A) 2,500.
• B) 2,000.
• C) 10,000.
• D) 1,667.

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Definitions:

Variable Manufacturing Cost

Costs that vary directly with the level of production output, such as materials and direct labor.

Unit Product Cost

The overall expense incurred in manufacturing a single product unit, encompassing material, workforce, and indirect costs.

Variable Selling Cost

Costs that change in proportion to the volume of goods sold, such as commissions or shipping charges.

Financial Advantage

The benefit gained in financial terms, often seen as increased profits, cost savings, or return on investment.