If Fixed Costs Are $700,000 and the Unit Contribution Margin

question 134

Multiple Choice

If 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

Understand and calculate consolidated net income and retained earnings.

Assess the impact of inter-company transactions on consolidated financial statements.

Identify the treatment of intangible assets with indefinite lives and their impairment tests.

Analyze the effect of non-controlling interests on consolidated financial statements.

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Definitions:

Tax Rate

The part of an individual's or corporation's earnings that is subject to taxation.

Debt-Equity Ratio

The ratio indicating a corporation's reliance on debt financing, found by dividing its total debts by the equity held by its shareholders.

After-Tax Cost of Debt

The net cost of debt after accounting for the effects of taxes, reflecting the actual cost to a company.

Cost of Equity

The theoretical compensation paid by a company to its equity investors, or shareholders, for the risk involved in investing their capital.