Given a Break- Even Point of 88,000 Units and a Contribution

question 55

Multiple Choice

Given a break- even point of 88,000 units and a contribution margin per unit of $9.60, the total number of units that must be sold to reach a net pre- tax profit of $18,096 is:

• A) 1,885 units
• B) 89,885 units
• C) 88,000 units
• D) indeterminable

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Definitions:

Minimum Required Return

The minimum return that investors expect to earn from their investment.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity allowed for the actual output, multiplied by the standard price per unit of materials.

Materials Price Variance

The difference between the actual unit price paid for an item and the standard price, multiplied by the quantity purchased.

Standard Quantity

The expected or established quantity of materials or labor expected to be used during a manufacturing process or production cycle.