If the Targeted Sales Are 12 000 Units

question 54

Multiple Choice

If the targeted sales are 12 000 units. The sales price per unit is $70, fixed costs are $130 000 and variable costs are $40 per unit, then planned profit must be:

• A) $4333.
• B) $303 333.
• C) $710 000.
• D) $230 000.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenses necessary to convert raw materials into finished products.

Blending Department

A production department focused on combining various raw materials or components into a final product in a consistent and homogeneous manner.

Weighted-Average Method

An inventory costing method that averages out all costs of inventory available for sale during the period.

Process Costing System

An accounting method used where similar goods are produced in a continuous process, distributing costs over the units produced, making it easier to ascertain per unit cost.