Thomas Company Had the Following Information -How Many Units Need to Be Sold to Produce a Driver}}

question 66

Multiple Choice

Thomas Company had the following information: $\begin{array}{lcc} \underline{\text { Activity Driver}}& \underline{\text { Unit Variable Cost }}&\underline{\text { Level of Activity Driver}}\\\text { Units sold } & \$ 20 & -- \\\text { Setups } & 1,000 & 80 \\\text { Engineering hours } & 60 &2,000 \\\text { Other data: } & &\end{array}$

$\begin{array}{lc}\text { Total fixed costs (traditional) } & \$ 800,000 \\\text { Total fixed costs (ABC) } & \$ 400,000 \\\text { Unit selling price } & \$ 40\end{array}$
-How many units need to be sold to produce a before-tax profit of $120,000 using ABC?

• A)21,000 units
• B)36,000 units
• C)51,000 units
• D)81,000 units

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Definitions:

Reduces Liability

This term generally refers to actions or strategies that decrease the legal responsibilities or debts of a business or individual.

Checking Account

A bank account that allows for numerous withdrawals and deposits, often used for day-to-day transactions.

Banking Section

The part of an organization or software that deals with financial transactions and account management with banks.

Receive Payments

It refers to the process of collecting money from customers or clients for goods sold or services rendered.