Revert Creations Sells a Single Product at a Price of $50

question 23

Multiple Choice

Revert Creations sells a single product at a price of $50 per unit.Fixed costs total $312,000 and variable costs per unit are $24.Revert is considering the purchase of new equipment that would reduce variable costs per unit to $21, but fixed costs would increase to $334,370.Above what volume would Revert be profitable with the new machine, assuming the selling price remains constant?

• A)12,000 units
• B)11,530 units
• C)23,530 units
• D)There is not enough information provided to determine the answer.

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Definitions:

Year-end Balance Sheets

Financial statements detailing a company's assets, liabilities, and equity at the end of a fiscal year.

Retained Earnings

Profits that a company retains rather than distributes to its shareholders as dividends, often used for reinvestment.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss of value over time.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue.