Gena Manufacturing Company Has a Fixed Cost of $225,000 for the Production

question 42

Multiple Choice

Gena Manufacturing Company has a fixed cost of $225,000 for the production of tubes.Estimated sales are 150,000 units.A before tax profit of $125,000 is desired by the controller.If the tubes sell for $5 each,what unit contribution margin is required to attain the profit target?

• A) $3.00.
• B) $2.33.
• C) $1.47.
• D) $.90.

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Definitions:

Equity Carve-out

A process in which a company sells a portion of the equity of a subsidiary or division to outside investors, typically through a public offering.

Spin-out

A type of corporate restructuring where a division of a parent company becomes an independent business. The parent company may retain a stake in the new company.

IPO

An Initial Public Offering (IPO) is the process through which a private company offers shares to the public for the first time to raise capital.

Floatation Costs

Expenses incurred by a company in issuing new securities, including fees to underwriters, legal fees, and registration fees.