A Firm Sells Two Products, Regular and Ultra

question 44

Multiple Choice

A firm sells two products, Regular and Ultra. For every unit of Regular sold, two units of Ultra are sold. The firm's total fixed costs are $1,612,000. Selling prices and cost information for both products follow. What is the firm's break-even point in units of Regular and Ultra?

• A) 31,000 Regular units and 31,000 Ultra units.
• B) 31,000 Regular units and 62,000 Ultra units.
• C) 10,333 Regular units and 20,667 Ultra units.
• D) 36,167 Regular units and 72,333 Ultra units.
• E) 62,000 Regular units and 31,000 Ultra units.

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Definitions:

Units Transferred Out

In process costing, the total units moved from one production process or department to the next during a given period.

Units Started

This term measures the quantity of production units a manufacturing process initiates in a given period, marking the beginning stages of the production cycle.

Conversion Costs

Costs incurred to convert raw materials into finished products, usually comprising direct labor and manufacturing overhead.

Total Materials Costs

The total expense incurred for materials used in the production of goods, including direct and indirect materials.