M and M,Inc

question 62

Multiple Choice

M and M,Inc.produces a product that has a variable cost of $3.00 per unit.The company's fixed costs are $30,000.The product is sold for $5.00 per unit and the company desires to earn a target profit of $20,000.What is the amount of sales that will be necessary to earn the desired profit?

• A) $75,000
• B) $50,000
• C) $83,333
• D) $125,000

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Definitions:

Audited Company

An audited company is one that has undergone a formal examination of its financial accounts and statements by an independent auditor.

GAAP And GAAS

GAAP (Generally Accepted Accounting Principles) are a set of accounting standards used in the U.S., while GAAS (Generally Accepted Auditing Standards) are guidelines for auditors in executing audit engagements.

Prima Facie Evidence

Evidence that, on its face, is sufficient to prove a particular proposition or fact unless refuted by contrary evidence.

Negligence

A failure to exercise the care that a reasonably prudent person would exercise in similar circumstances, leading to harm or damage.