Which of the Following Statements Regarding Company a Is Incorrect

question 78

Multiple Choice

Which of the following statements regarding Company A is incorrect?

• A) If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its break-even point in units is 36,000 units.
• B) If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its variable expenses must be $20 per unit.
• C) If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, once it has covered its fixed costs, net income will increase by $30 for each additional unit sold.
• D) Both if Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its break-even point in units is 36,000 units and if Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its variable expenses must be $20 per unit are incorrect.

Understand how to analyze the liquidity of a company through comparative financial information.

Comprehend the perpetual inventory system and its application in accounting for sales.

Calculate gross profit from provided financial information.

Apply the periodic inventory system in journalizing transactions.

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Definitions:

Marginal Revenue Product

The additional revenue generated from using one more unit of a particular input, holding all other inputs constant.

Variable Input

Inputs or resources whose quantity can be changed in the short run to increase or decrease production.

Wage Rate

The standard amount of pay given for work performed, often expressed as an amount per hour, day, or other unit of time.

Profit-maximizing

The process or strategy of adjusting production and sales to achieve the highest possible profit under given market conditions.