If a Firm Has Fixed Costs of $85,000, a Variable

question 56

Multiple Choice

If a firm has fixed costs of $85,000, a variable cost per unit of $10 and sales price per unit of $15, what is the firm's breakeven point in units?

• A) 15,000 units
• B) 17,000 units
• C) 5,667 units
• D) 3,400 units

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Definitions:

Direct Method

A way of reporting cash flows from operating activities by showing major classes of gross cash receipts and payments.

Operating Activities

Operating activities involve the primary day-to-day functions of a business related to producing and selling its goods or services.

Statement of Cash Flows

A financial statement that provides a detailed analysis of what happened to a company's cash during a period, categorizing cash flows into operating, investing, and financing activities.

Financing Activities

Transactions and events that affect the equity and long-term liabilities of a company, often reflected in the financing section of the cash flow statement.