Use the Figure for the Question(s)below

question 18

Multiple Choice

Use the figure for the question(s) below.
-A maker of computer games expects to sell 500 000 games at a price of $49 per game. These units cost $12 to produce. Selling, general, and administrative expenses are $1.2 million and depreciation is $280 000. What is the EBIT break-even point for the number of games sold in this case?

• A)$40 000
• B)$24 865
• C)$30 192
• D)$30 204

Recognize the difference between cash and accrual basis of accounting and their implications on financial statements.

Identify the purpose and timing of revenue recognition in accordance with accrual accounting.

Understand the requirements and justifications for making adjusting entries in the accounting cycle.

Comprehend the effects of adjusting entries on reporting expenses and revenues.

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Definitions:

Performance Monitor

A system tool that measures the performance of hardware, software, and applications, helping in understanding and optimizing system performance.

Cache Memory

Small blocks of memory, located directly on and next to the central processing unit (CPU) chip, that act as holding places for recently or frequently used instructions or data that the CPU accesses the most.

Potential Capacity

The maximum output or performance that a system or entity could achieve under ideal conditions.

Mechanical Hard Drive

A data storage device that uses magnetic storage to store and retrieve digital information using one or more rigid rapidly rotating disks coated with magnetic material.