A Manufacturer Has Fixed Costs of $100,000, a Variable Cost

question 151

Multiple Choice

A manufacturer has fixed costs of $100,000, a variable cost of $10 per unit of output, and break-even volume of 50,000 units. What should the manufacturer's unit cost be in order to break even?

• A) $10
• B) $12
• C) $14
• D) $16
• E) $20

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Definitions:

Allowance Method

An accounting technique used to estimate and account for bad debts or uncollectible accounts receivable.

Bad Debts

Accounts receivable that a company considers uncollectible and writes off as a loss in its financial statements.

Sales

The transactions involving the exchange of goods or services for money.

Accounts Receivable Turnover

A financial metric that measures how many times a business collects its average accounts receivable amount within a period, indicating the efficiency of credit and collections.