A Company Is Considering Two Alternative Technologies for Manufacturing a Product

question 58

Multiple Choice

A company is considering two alternative technologies for manufacturing a product. The cost data are shown below. $\begin{array}{|l|c|c|}\hline & \text { A } & \text { B } \\\hline \text { Fixed Cost } & \$ 10,000 & \$ 25,000 \\\hline \text { Variable Cost } & \$ 30 / \text { unit } & \$ 5 / \text { unit } \\\hline\end{array}$ The breakeven volume is _____.

• A) less than or equal to 200 units
• B) more than 200 but less than or equal to 300 units
• C) more than 300 but less than or equal to 400 units
• D) more than 400 units

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Definitions:

Share Capital

The funds raised by a company through the issuance of shares to investors.

Deferred Tax Liability

A tax obligation that a company owes but does not have to pay until a future date, usually resulting from differences in accounting methods for tax and financial reporting purposes.

Asset Revaluation

The upward or downward adjustment of the book value of an asset to properly reflect its current market value.

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses and costs associated with those activities.