The Current Cost Structure for the Production Department of Performance

question 77

Multiple Choice

The current cost structure for the production department of Performance, Inc., has fixed expenses of $500,000 and variable expenses of $200 per unit.Unit sales volume is 6,000 units.Performance, Inc., can reduce variable expenses to $100 per unit with automated manufacturing technology.What is the new fixed expense amount after automation that will produce the same current operating income on sales volume of 6,000 units?

• A)$500,000.
• B)$1,100,000.
• C)$1,200,000.
• D)$1,700,000.

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