A Proposed Project Has fiXed Costs of $3,600, Depreciation Expense

question 297

Multiple Choice

A proposed project has fixed costs of $3,600, depreciation expense of $1,500, and a sales quantity of 1,300 units. What is the contribution margin if the projected level of sales is the accounting break-
Even point?

• A) $3.92
• B) $4.14
• C) $4.50
• D) $4.80
• E) $5.00

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Definitions:

Adjusting Entry

An entry made in the accounts to correct or allocate income and expenses to the appropriate accounting period.

Three Months Rent

An accounting entry typically categorized as a prepaid expense, representing payment for rent before it's due.

Closing Entry

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent equity account, thereby preparing the books for the next period.

Correct Closing Entry

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts, thus preparing the books for the next period.