If Total Fixed Expenses Are $50,000, the Target Operating Income

question 222

True/False

If total fixed expenses are $50,000, the target operating income is $10,000 and the contribution margin is $15 per unit, the sales needed to achieve the target operating income will be 4,000 units.

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Definitions:

Financing Costs

Expenses incurred by a company in the process of raising capital through debts and/or equity, including interest payments and commissions.

Basic Overheads

The regular and necessary costs, such as rent and utilities, that are involved in operating a business.

Interest Charges

This is the cost incurred for borrowing money, typically expressed as a percentage of the principal loan amount.

Net Cash Flow

The difference between a company's cash inflows and outflows within a specified period, indicating its financial health.