If Fixed Costs Are $450,000 and the Unit Contribution Margin

question 30

True/False

If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product.

Overhead Rate

A measure used in cost accounting to allocate overhead costs to produced units, typically expressed as a percentage or a ratio.

Predetermined Overhead Rate

A rate calculated before the period begins, used to allocate manufacturing overhead costs to individual units of production based on a specific activity base.

Direct Labor Costs

Expenses related to employees who are directly involved in the production of goods or services, as opposed to administrative or managerial staff.