Kurt Neal and Son Is Considering a Project with a Discounted

question 9

Multiple Choice

Kurt Neal and Son is considering a project with a discounted payback just equal to the project's life. The projections include a sales price of $11,variable cost per unit of $8.50,and fixed costs of $4,500. The operating cash flow is $6,200. What is the break-even quantity?

• A) 1,800 units
• B) 2,480 units
• C) 3,057 units
• D) 3,750 units
• E) 4,280 units

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Definitions:

Product Level

Pertains to costs or activities associated with a specific product rather than the business as a whole.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the resources that they consume, aiming to provide more accurate costing information.

Implementation Costs

Expenses associated with putting a new system or process into use.

Overhead

The indirect costs of running a business that are not directly tied to a specific product or service, such as utilities, rent, and administrative salaries.