Hanalei Fishing Trips Is Operating at Its Break-Even Point of 4,200

question 103

Multiple Choice

Hanalei Fishing Trips is operating at its break-even point of 4,200 fishing trips per year.Which of the following statements is true?

• A)The amount of the company's total costs equals the amount of its revenues.
• B)The company's fixed costs equal its variable costs.
• C)The company's profit is equal to its contribution margin.
• D)Assuming no other changes, if the company sold fewer trips, it will earn a higher contribution margin per trip.

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Definitions:

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remains constant regardless of the level of production.

Variable Costing

An accounting method that considers only variable production costs (costs that change with the level of output) in the calculation of product costs.

Unit Product Cost

The total cost associated with producing one unit of a product, including both variable and fixed costs.

Variable Costing

An accounting method that includes only variable production costs (direct labor, direct materials, and variable manufacturing overhead) in product costs.