Perteet Corporation's Relevant Range of Activity Is 3,000 Units to 7,000

question 164

Multiple Choice

Perteet Corporation's relevant range of activity is 3,000 units to 7,000 units.When it produces and sells 5,000 units,its average costs per unit are as follows:
If 4,000 units are produced,the total amount of manufacturing overhead cost is closest to:

• A) $18,100
• B) $28,000
• C) $21,400
• D) $14,800

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, determined by the company's fixed versus variable costs.

Financial Break-Even

The point at which total revenues are equal to total operational and financial costs, indicating a project or company is not losing money but not making profit either.

Required Return

The minimum expected return an investor seeks on an investment, considering the risk associated with it.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much revenue is contributing to fixed costs and profit.