Assume the Following Cost Information for Janice Company If Fixed Costs Increased by 10% and Management Wanted to Selling

question 91

Multiple Choice

Assume the following cost information for Janice Company: $\begin{array}{lr}\text { Selling price per unit } & \$ 144 \\\text { Variable costs per unit } & \$ 80 \\\text { Total fixed costs } & \$ 80,000 \\\text { Tax rate } & 40 \%\end{array}$ If fixed costs increased by 10% and management wanted to maintain the original break-even point, then the selling price per unit would have to be increased to _____.

• A)$158.40
• B)$208.00
• C)$150.40
• D)$155.20

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Definitions:

Expected Returns

The projected average return of an investment over a specified period, accounting for various possible outcomes.

After-Tax Cost of Debt

The net cost of debt to a company after accounting for the tax benefits of interest expenses.

CGT

Capital Gains Tax (CGT) is a tax on the profit earned from the sale of non-inventory assets that were purchased at a cost amount that was lower than the amount realized on the sale.

Flotation Cost

The total costs a company faces in issuing new securities, including underwriting, legal, and registration fees.