Jacob Inc Has Fixed Costs of $240,000, the Unit Selling Price

question 202

Multiple Choice

Jacob Inc. has fixed costs of $240,000, the unit selling price is $32, and the unit variable costs are $20. The old and new break-even sales (units) , respectively, if the unit selling price increases by $4 is

• A)7,500 units and 6,667 units
• B)20,000 units and 30,000 units
• C)20,000 units and 15,000 units
• D)12,000 units and 15,000 units

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs.

Overapplied

A situation in cost accounting where the allocated overhead costs exceed the actual overhead costs.

Finished Goods Inventory

The stock of completed products that are ready to be sold.

Underapplied

Describes the situation where the allocated manufacturing overhead is less than the actual manufacturing overhead incurred.