XYZ Company Has a Variable Cost Ratio of 40%, Fixed

question 82

Multiple Choice

XYZ Company has a variable cost ratio of 40%, fixed expenses of $200,000, and desires to earn operating income of $100,000.Total sales revenue required to achieve XYZ Company's desired operating income is:

• A)$340,000.
• B)$380,000.
• C)$420,000.
• D)$500,000.

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Definitions:

Assembly Department

A section in a manufacturing plant where parts are put together to create complete goods.

Weighted-Average Method

A cost flow assumption used in inventory valuation that averages out all costs of goods available for sale during the period.

Manufacturing Activity

A set of processes involved in transforming raw materials into finished products.

Labor and Overhead

The combined costs of direct labor and indirect expenses incurred during production.