Bovous Stores,Inc The Revenues That the Company Must Earn Annually to Make

question 59

Multiple Choice

Bovous Stores,Inc.,sells several products.Information of average revenue and costs is as follows: $\begin{array}{lr}\text { Selling price per unit } & \$ 20.00 \\\text { Variable costs per unit: } & \\\text { Direct material } & \$ 4.00 \\\text { Direct manufacturing labor } & \$ 1.60 \\\text { Manufacturing overhead } & \$ 0.40 \\\text { Selling costs } & \$ 2.00 \\\text { Annual fixed costs } & \$ 96,000\end{array}$
The revenues that the company must earn annually to make a profit of $144,000 are ________.

• A) $378,000
• B) $425,000
• C) $400,000
• D) $450,000

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Definitions:

Product Costs

Costs that are directly attributed to the creation of a product, including direct labor, direct materials, and manufacturing overhead.

Production Departments

Specific areas or units within a manufacturing facility where the actual production or assembly of goods takes place.

Activity Cost Pools

Groupings of individual costs, determined by the activities they support, used in activity-based costing to allocate costs more accurately.

Factory Overhead Rates

The method used to allocate all indirect manufacturing costs to products, based on a predetermined rate.