The Mini-Max Company Has the Following Cost Information on Their

question 11

Multiple Choice

The Mini-Max Company has the following cost information on their new prospective project. Fixed costs are $200/year. (Initial investment is $700) .
Variable costs: $3/unit.
Depreciation: $140/year.
Price: $8/unit.
Discount rate: 12%.
Project life: 5 years.
Tax rate: 34%.
Calculate the accounting break-even point.

• A) 68.00 units/year.
• B) 103.03 units/year.
• C) 113.33 units/year.
• D) 25.00 units/year.

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Definitions:

Direct Materials

The raw materials that can be directly traced to the manufacturing process of a product.

Indirect

Costs or actions that are not directly traceable to a specific product, service, or activity but are necessary for the business to operate.

Direct

Expenses or costs that can be directly traced to a specific cost object, like a product, department, or project.

Cost Object

Anything for which cost data are desired. Examples of cost objects are products, customers, geographic regions, and parts of the organization such as departments or divisions.