Solar Films Inc

question 107

Multiple Choice

Solar films Inc. manufactures a window tint film to block UV rays. Price and cost data for a relevant range of up to 250,000 square metres of film per month are as follows: Sales price per unit $25.00
(Current monthly volume is 150,000 square metres)
Variable costs per unit:


Management is currently in contract negotiations with the labour union. The new contract is expected to result in an increase of 10% in direct labour costs and an increase in monthly fixed costs of $15,625.
If these estimates are accurate by how many units per month will break-even sales change?

• A) 70,500
• B) 10,500
• C) 2,500
• D) 2,232

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Definitions:

Predetermined Manufacturing Overhead Rate

A rate used to allocate estimated manufacturing overhead to individual jobs based on a predetermined activity, such as labor hours or machine hours.

Job C

A specific task, project, or assignment identified uniquely, usually within a job costing system.

Machine-Hours

A measure of production time where one machine-hour equals one machine working for one hour, used as an allocation base in costing.

Total Job Cost

The cumulative costs associated with a specific job or project, including materials, labor, and overhead.