Sutton Company Produces Flash Drives for Computers, Which It Sells

question 136

Multiple Choice

Sutton Company produces flash drives for computers, which it sells for $20 each. The variable cost to make each flash drive is $6. During April, 700 drives were sold. Fixed costs for April were $2 per unit for a total of $1,400 for the month. How much is the monthly break-even level of sales in dollars for Sutton Company?

• A) $100
• B) $2,000
• C) $7,000
• D) $4,200

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Definitions:

Controlling Interest

Controlling interest is a situation in which an investor, entity, or group of entities owns enough shares to dictate the company's policies and direction through voting power.

Ownership Structure

The way in which a company is owned and organized, detailing the distribution of shareholder and stakeholder interests.

Subsidiary

An entity that is controlled by another entity.

Sequential Acquisition

An acquisition in which the ultimate parent acquires its shares in the immediate parent before the immediate parent acquires its shares in the ultimate subsidiary, or both acquisitions occur on the same date.