Johnson's Plumbing's Fixed Costs Are $700,000 and the Unit Contribution

question 223

Multiple Choice

Johnson's Plumbing's fixed costs are $700,000 and the unit contribution margin is $17.What amount of units must be sold in order to realize an operating income of $100,000?

• A) 5,000
• B) 41,176
• C) 47,059
• D) 58,882

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Definitions:

Indirect Method

A cash flow statement presentation method that adjusts net income for changes in balance sheet accounts to calculate cash flow from operating activities.

Operating Activities

The day-to-day actions that a business undertakes to generate revenue, as reflected in the cash flow statement.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Indirect Method

A way of calculating cash flows for operating activities in the cash flow statement by adjusting net income for changes in non-cash items.