A Company's Product Sells for $240 Per Unit

question 10

Multiple Choice

A company's product sells for $240 per unit. The contribution margin ratio is 12.5%. Fixed costs run at $141,000 per month. How many dollars of sale revenue are required to break even?

• A) $1,129,000
• B) $1,128,000
• C) $956,000
• D) $1,050,000

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Definitions:

Activity-Based Costing

Activity-Based Costing is a method that assigns costs to products or services based on the activities they require, aiming for more accurate allocation of overhead.

Activity Rates

The costs associated with specific activities, used in activity-based costing to allocate overhead costs based on actual consumption.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, improving costing accuracy.

Overhead Cost

Indirect costs of running a business that are not directly tied to a specific product or service, such as rent, utilities, and administrative expenses.