Lightfoot Company Sells Its Product for $55 and Has Variable

question 88

Multiple Choice

Lightfoot Company sells its product for $55 and has variable cost of $30 per unit.The total fixed costs are $25,000.What will be the effect on the breakeven point in units if variable cost increases by $10 due to an increase in the cost of direct materials?

• A)It will increase by 667 units.
• B)It will decrease by 667 units.
• C)It will decrease by 175 units.
• D)It will increase by 175 units.

---

Definitions:

Cumulative Preferred Stock

A type of preferred stock that has a feature where missed dividend payments accumulate and must be paid out before dividends can be issued to other stock types.

Outstanding Shares

Represents the total shares of a corporation’s stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares rather than cash.

Market Value

The contemporary rate at which a marketplace allows the purchase or sale of an asset or service.