The Allen Company Had the Following Income Statement for the Month

question 81

Multiple Choice

The Allen Company had the following income statement for the month of July: $\begin{array}{c}\text { Allen Company}\\\text { Income Statement}\\\text { For the Month of July}\\\\\begin{array}{lrr}\text { Sales }(\$ 60 \times 10,000) & & \$ 600,000 \\\text { Cost of goods sold: } & & \\\text { Direct materials }(\$ 12 \times 10,000) & \$ 120,000 \\\text { Direct labour }(\$ 9 \times 10,000) & 90,000 & \\\text { Variable factory overhead }(\$ 7.50 \times 10,000) & 75,000 \\\text { Fixed factory overhead } & \underline{120,000} & \underline{405,000} \\\text { Gross profit } & & \$ 195,000 \\\text { Selling and administrative expenses: } \\\text { Variable }(\$ 1.50 \times 10,000) & \$ 15,000 & \\\text { Fixed }& \underline{90,000} & \underline{105,000} \\\text { Operating income }& & \$ 90,000\end{array}\end{array}$
- What is Allen Company's break-even sales volume?

• A)7,000 units
• B)10,000 units
• C)11,211 units
• D)20,000 units

---

Definitions:

Hydrogen Fuel

A clean energy source that produces only water when burned, used in fuel cells or internal combustion engines.

Recycling Technologies

The range of techniques and processes used to collect, process, and repurpose waste materials into new products, reducing the need for raw materials.

Germany

A country in Central Europe known for its rich history, cultural heritage, and as a leading EU and global economy.

Trickle-down Theory

An economic theory that advocates reducing taxes on businesses and the wealthy in society as a means to stimulate business investment and benefit all members of society.