Evans Company Has Estimated the Following Amounts for Its Next

question 98

Multiple Choice

Evans Company has estimated the following amounts for its next fiscal year: $$\begin{array} { | l | r | } \hline \text { Total fixed expenses } & \$ 832,500 \\\hline \text { Sale price per unit } & 40 \\\hline \text { Variable expenses per unit } & 25 \\\hline\end{array}$$ What will happen to the breakeven point (in units) if Evans can reduce fixed expenses by $22,500?

• A) The breakeven point will decrease by 1,500 units.
• B) The breakeven point will decrease by 562 units.
• C) The breakeven point will decrease by 900 units.
• D) The breakeven point will increase by 562 units.

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Definitions:

Accounts Receivable

Receivables from clients to a corporation for products delivered or services rendered without payment.

Unearned Subscription Revenue

Unearned subscription revenue represents money received by a company for subscriptions or services not yet provided or delivered, recognized as a liability until the service is fulfilled.

Unearned Rent

Income received by a landlord for a period of rent not yet occurred; it's considered a liability until the service period passes.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate years, ensuring financial statements are accurate.