Pedro Company Has Total Fixed Costs of $480,000

question 71

Multiple Choice

Pedro Company has total fixed costs of $480,000.Total fixed and variable costs are $600,000 at a production level of 150,000 units.The variable cost per unit at 300,000 units is:

• A)$4.00.
• B)$0.80.
• C)$0.40.
• D)$3.20.

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Definitions:

Bad Debts Expense

An expense account to record accounts receivable that a company does not expect to collect.

Allowance for Doubtful Accounts

A contra-asset account designed to predict the value of receivables that are expected to be uncollectible.

Direct Method

A cash flow statement preparation approach that lists major cash receipts and payments during the period.

Bad Debts Recovered

Previously written off debts that have unexpectedly been collected.