Hsu, Inc Sells a Single Product for $12

question 70

Multiple Choice

Hsu, Inc. sells a single product for $12. Variable costs are $8 per unit and fixed costs total $360,000 at a volume level of 60,000 units. Assuming that fixed costs do not change, Hsu's break-even point would be:

• A) 30,000 units.
• B) 45,000 units.
• C) 90,000 units.
• D) negative because the company loses $2 on every unit sold.
• E) a positive amount other than the specific amounts given.

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Definitions:

Accounts Receivable

Monies owed to a business by its customers for goods or services delivered or used but not yet paid for.

Bad Debt Expense

An expense recognized by businesses for receivables that are considered uncollectible, reflecting estimated losses.

Consignment

A business arrangement where goods are left with a third party to sell, but the original owner retains ownership until the items are sold.

Allowance for Uncollectible Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collected.