Austin Manufacturing Had the Following Operating Data for the Year

question 87

Multiple Choice

Austin Manufacturing had the following operating data for the year just ended. Management plans to improve the quality of its only product by: (1) replacing a component that costs $3.50 with a higher-grade component that costs $5.50 and (2) renting a packing machine for $18,000 a year.If the desired target profit is $288,000,how many units must the company sell?

• A) 19,300 units.
• B) 20,842 units.
• C) 21,316 units.
• D) 22,500 units.

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Definitions:

Investment Property

Real estate property that has been purchased with the intention of earning a return on the investment through rental income, the future resale of the property, or both.

AASB 140

The Australian Accounting Standards Board regulation relating to the accounting for investment property.

IAS 40

A standard issued by the International Accounting Standards Board related to the accounting for investment property.

AASB 116

An Australian Accounting Standards Board standard detailing the accounting treatment for property, plant, and equipment.