Bloom Company Has Variable Cost Per Unit of $20 and a Sales

question 31

Multiple Choice

Bloom Company has variable cost per unit of $20 and a sales price of $35 per unit.Its total fixed costs are $240,000.Which of the following is a correct statement?

• A) Company D's break-even point is 12,000 units.
• B) If budgeted sales are 25,000 units, D's margin of safety is 10,000 units.
• C) If Company D's variable cost per unit increases and nothing else changes, the margin of safety will decrease.
• D) If Company D's variable cost per unit decreases and nothing else changes, the break-even point will stay the same.

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Definitions:

Circular Flow Diagram

A visual model that shows how goods, services, and money move through an economy in a circular manner between households and firms.

Firms

Business organizations or entities engaged in commercial, industrial, or professional activities with the goal of generating profits.

Resource Market

Markets where resources (or factors of production) like labor, capital, and raw materials are bought and sold.

Consumption Expenditures

The total amount spent by consumers on goods and services within a specified period.