Hurst Co Manufactures and Sells a Single Product -How Many Units Need to Be Sold to Earn an Cost

question 92

Multiple Choice

Hurst Co. manufactures and sells a single product. Price and cost data regarding this product are as follows: $\begin{array}{|l|r|}\hline \text { Selling price } & \$ 40 \text { per unit } \\\hline \text { Variable manufacturing cost } & \$ 20 \text { per unit } \\\hline \text { Variable selling \& administrative expenses } & \$ 6 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 208,000 \text { per year } \\\hline \text { Fixed selling \& administrative expenses } & \$ 324,000 \text { per year } \\\hline\end{array}$



-How many units need to be sold to earn an annual operating income equal to 10% of sales?

• A) 44,000 units.
• B) 53,200 units.
• C) 54,500 units.
• D) 47,500 units.

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Definitions:

R&D Expenditures

Funds allocated towards research and development activities in order to innovate or improve products or services.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for competition based on product differentiation.

Market Structure

Refers to the organizational characteristics of a market, including the number of firms, level of competition, and the distribution of market shares.

R&D

Stands for Research and Development, the innovative activities undertaken by corporations or governments in developing new services or products, or improving existing ones.