Lewis Production Company Had the Following Projected Information What Level of Sales Dollars Is Needed to Obtain a Selling

question 23

Multiple Choice

Lewis Production Company had the following projected information: $\begin{array}{lr}\text { Selling price per unit } & \$ 150 \\\text { Variable cost per unit } & \$ 90 \\\text { Total fixed costs } & \$300,000\end{array}$
What level of sales dollars is needed to obtain a target before-tax profit of $75,000?

• A)$375,000
• B)$625,000
• C)$750,000
• D)$937,500

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Definitions:

Unfavorable Variance

The difference between actual costs and standard or budgeted costs when actual costs are higher, indicating lower profitability.

Actual Costs

The real, specific expenses incurred or required to perform an operation, produce an item, or offer a service.

Standard Costs

Predetermined costs to manufacture a single unit or a number of units during a specific period under current or anticipated operating conditions.

Total Materials Variance

The difference between the actual cost of materials used in production and the expected (or standard) cost, used to evaluate cost control.