If Total Fixed Costs Are $179,000, the Contribution Margin Per

question 220

Multiple Choice

If total fixed costs are $179,000, the contribution margin per unit is $10.00, and targeted operating income is $22,000, how many units must be sold to breakeven?

• A)1,790,000
• B)20,100
• C)17,900
• D)220,000

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Definitions:

Activity Cost Pools

Activity Cost Pools are aggregations of all the costs associated with particular activities used in activity-based costing to allocate overhead costs more accurately.

Predetermined Overhead Rates

Rates used to apply manufacturing overhead to products or job orders, calculated in advance based on estimated overhead costs and activity levels.

Activity-Based Costing

A method of costing that identifies activities in an organization and assigns the cost of each activity to products or services according to the actual consumption of each.

Expected Activity

This term refers to the estimated level of operations or production expected to be achieved in a future period.