If Fixed Costs Are $490,000, the Unit Selling Price Is

question 202

Multiple Choice

If fixed costs are $490,000, the unit selling price is $35, and the unit variable costs are $20, what is the break-even sales (units) if fixed costs are reduced by $40,000?

• A) 32,667 units
• B) 14,000 units
• C) 30,000 units
• D) 24,500 units

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Definitions:

Product Costs

Expenses directly tied to the production of goods or services, including materials, labor, and overhead costs.

Period Costs

Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued.

Fixed Costs

Expenses that do not change in total despite fluctuations in production or sales volume, such as rent, insurance, and salaries.

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.