Kid's Corner Sells Lamp Systems for $25

question 113

Essay

Kid's Corner sells lamp systems for $25.These systems use LEDs to create a light display across walls or ceilings.Kid's Corner pays $13 for the systems.Fixed costs incurred by the company are $18,000.
a.What is the breakeven point in units?
b.If Kid's Corner wishes to earn $10,000 in operating income, how many systems will it have to sell?

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Definitions:

Direct Costs

Direct costs are expenses that can be directly traced to the production of a specific good or service, without any allocation.

Delivery Expenses

Costs associated with the transport of goods from the seller to the buyer, which can include freight, packaging, and handling fees.

Indirect Expenses

Costs that are not directly tied to the production of goods or services, such as administrative salaries, rent, and utilities.

Cost Center

A business unit or department within an organization that does not directly generate revenue but incurs costs, and its performance is evaluated based on cost control.