Franklin Producers Sells Its Core Product for $8 Per Unit

question 235

Multiple Choice

Franklin Producers sells its core product for $8 per unit and has variable costs of $6 per unit.Total fixed costs are $28,000.Suppose variable costs increase by 20% due to an increase in the cost of direct materials.What will be the effect on the breakeven point in units?

• A)Decrease from 2,000 units to 1,842 units
• B)Decrease from 14,000 units to 4,118 units
• C)Increase from 14,000 units to 35,000 units
• D)Decrease from 4,667 units to 3,889 units

---

Definitions:

Misleading

Information or statements that give a false idea or impression, leading others to believe something that is not true.

Indirect Taxes

Taxes levied on goods and services rather than on income or profits, such as sales tax or VAT.

Federal Government

The federal government is the national government of a federal country, which holds the authority to govern the nation as a whole and is composed of several separate levels, including a central governing body and state or provincial governments.

Custom Duties

Taxes imposed on the import and export of goods between countries.