Use the Following Information for the Next 3 Questions

question 59

Multiple Choice

Use the following information for the next 3 questions.
Horton and Associates produces two products named BigBlast and LittleBlast. Last month 4,000 units of BigBlast and 1,000 units of the LittleBlast were produced and sold. Following are average prices and costs for last month: The production lines for both products are highly automated, so large changes in production cause very little change in total direct labor costs. Workers who are classified as direct labor monitor the production line and are permanent employees who regularly work 40 hours per week. All costs other than "corporate fixed costs" listed under each product line could be avoided if the product line were dropped.
-What is the breakeven sales volume (in units) for BigBlast? (In other words, what is the sales volume at which Horton should be financially indifferent between dropping and keeping BigBlast?)

• A) 728 units
• B) 2,545 units
• C) 1,084 units
• D) 790 units

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Definitions:

Independent Contractor

A person who is hired to perform a specific undertaking but who is free to choose how and when to perform the work. An independent contractor may or may not be an agent.

Employee

An individual who is hired to perform services or duties for an employer under the terms of a contract of employment.

Retail Florist

A business specializing in selling cut flowers, arrangements, and other plant-related products directly to consumers.

Professional Corporation

A business entity formed by professionals, like lawyers, doctors, or accountants, offering their services while receiving certain tax and legal advantages.