Given Break-Even Sales in Units of 28,000 and a Unit

question 179

Multiple Choice

Given break-even sales in units of 28,000 and a unit contribution margin of $4, how many units must be sold to reach a target operating income of $4,000?

• A) 29,000
• B) 1,000
• C) 16,000
• D) 27,000

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Definitions:

Overhead Costs

Expenses that are not directly attributable to a specific product line or service but are necessary for the business to operate.

Support Department Cost Allocations

The process of distributing indirect costs from support departments to the producing departments based on their usage of services.

Product Costing System

A method used to assess the cost associated with producing a product, taking into account materials, labor, and overhead costs.

Production Department Rate

The Production Department Rate is a measure of efficiency in a production department, defined as the cost to produce one unit of product.