Horton and Associates Produces Two Products Named BigBlast and LittleBlast

question 92

Multiple Choice

Horton and Associates produces two products named BigBlast and LittleBlast. Last month 4,000 units of BigBlast and 1,000 units of LittleBlast were produced and sold. Following are average prices and costs for last month: BigBlast LittleBlast
Selling price $100 $200
Direct materials (25) (75)
Direct labour (15) (35)
Variable overhead (5) (30)
Product line fixed costs (10) (40)
Corporate fixed costs (25) (25)
Average margin per unit $ 20 $( 5)
The production lines for both products are highly automated, so large changes in production cause very little change in total direct labour costs. Workers who are classified as direct labour monitor the production line and are permanent employees who regularly work 40 hours per week. All costs other than "corporate fixed costs" listed under each product line could be avoided if the product line were dropped.
What is the breakeven sales volume (in units) for BigBlast? (In other words, what is the sales volume at which Horton should be financially indifferent between dropping and keeping BigBlast?) :

• A)728 units
• B)2,545 units
• C)1,084 units
• D)790 units

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Definitions:

Elaborative Rehearsal

A technique in memory strategies involving the linking of new information to existing knowledge through deeper cognitive processing.

Maintenance Rehearsal

A cognitive process that involves repeatedly verbalizing or thinking about a piece of information to keep it in short-term memory.

Systematic Rehearsal

A deliberate practice of repeatedly going over information or tasks to strengthen memory and improve proficiency.

Complex Rehearsal

A memory-enhancing technique that involves thinking about the meaning of the information to be remembered or making connections between new and existing knowledge.