Mae Company Sells Its Product for $7 Per Unit and Has

question 245

Multiple Choice

Mae Company sells its product for $7 per unit and has variable costs of $3 per unit. Total fixed costs are $72,000. 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)Increase from 18,000 units to 21,177 units
• B)Decrease from 7200 units to 6793, units
• C)Decrease from 18,000 units to 5295 units
• D)Decrease from 24,000 units to 20,000 units

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Definitions:

RICO

The Racketeer Influenced and Corrupt Organizations Act, a U.S. federal law designed to combat organized crime by allowing for extended criminal penalties and civil cause of action for acts performed as part of an ongoing criminal organization.

Predicate Acts

Actions or crimes that constitute part of a larger pattern of illegal activity, often related to racketeering or fraud.

Five-Year Period

A specified duration of time, often used in contexts such as contracts, warranties, and strategic planning, comprising five consecutive years.

Mens Rea

A legal term referring to the mental state or intention behind committing a crime; a key element in determining culpability.