If the Fixed Costs of Manufacturing a New Cell Phone

question 87

Multiple Choice

If the fixed costs of manufacturing a new cell phone are $10,000,the sales price is $60,and variable cost per unit is $20,the break-even point is

• A) 100 units.
• B) 4,000 units.
• C) 20 units.
• D) 1,000 units.
• E) 250 units.

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Definitions:

Direct Materials Purchases Variance

The difference between the actual cost of direct material purchases and the expected (or standard) cost, adjusted for volume purchased.

Standard Costs

Predetermined costs for materials, labor, and overhead used in budgeting and assessing performance.

Labor Efficiency Variance

A measure of the difference between the actual hours worked by employees and the standard hours expected to complete a task, used to assess labor productivity.

Direct Labor Standards

These standards define the amount of time and the rate of pay anticipated for direct labor required to manufacture a product or provide a service.