The Firm's Fixed Costs Are $60 000, Variable Cost Per

question 30

Multiple Choice

The firm's fixed costs are $60 000, variable cost per unit is $15 and selling price per unit is $20. The break-even point in units is

• A) 1715.
• B) 3000.
• C) 4000.
• D) 12 000.

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Definitions:

Variable Cost

Costs that change in proportion to changes in the level of production or sales volume.

Cost Volume Profit (CVP) Analysis

A financial analysis tool used to determine how changes in costs and volume affect a company's operating income and net income.

Simplified Model

An abstracted representation of a system that captures essential features while ignoring less relevant details to facilitate analysis and decision-making.

Activity-Based Costing

A pricing approach that discerns various tasks within a business and allocates the expenses of each activity to all goods and services based on their real usage.