Determine the Variable Cost of a Pen Manufacturing Company Per

question 10

Multiple Choice

Determine the variable cost of a pen manufacturing company per pen if its breakeven point is 250,000 pens, selling price of each pen is $5, and the fixed cost per year is $750,000.

• A) $2
• B) $3
• C) $4
• D) $1

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Definitions:

Fiscal Year

A one-year period used for financial reporting and budgeting, which may or may not align with the calendar year.

Adjusting Entries

Journal entries made at the end of an accounting period to update income and expense accounts and ensure adherence to the accrual basis of accounting.

Adjusted Trial Balance

A record comprising all the accounts with their respective balances, revised after adjusting entries, employed in the preparation of financial documents.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in a net profit or loss.