If Fixed Costs Are $500,000 and Variable Costs Are 60

question 181

True/False

If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.

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Definitions:

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor directly used to create the good.

Transfer Price

The cost at which divisions within the same organization trade goods and services with each other.

Operating Income

Earnings from a company’s primary business activities, excluding deductions of interest and taxes.

Variable Cost

Costs that vary directly with the level of production or output, such as raw materials and direct labor.