Assume the Following Cost Behaviour Data for Portrait Company -What Volume of Sales Dollars Is Required to Earn a

question 87

Multiple Choice

Assume the following cost behaviour data for Portrait Company: $$\begin{array} { l l l } \text { Sales price } & \$ 18.00 & \text { per unit } \\\text { Variable costs } & \$ 13.50 & \text { per unit } \\\text { Fixed costs } & \$ 22,500 & \\\text { Tax rate } & 40\% &\end{array}$$
-What volume of sales dollars is required to earn a before-tax income of $27,000?

• A)$90,000
• B)$180,000
• C)$198,000
• D)$270,000

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Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in a net profit or loss.

Owner's Equity Statement

A financial document detailing the changes in the equity of an owner in a company over a specific period.

Time Period Assumption

An accounting principle that suggests a business's activities can be divided into specific time periods for reporting purposes.

Fiscal Year

The one-year period an organization uses for accounting purposes and preparing financial statements, which may or may not align with the calendar year.