Biscuit Company Sells Its Product for $50

question 85

Multiple Choice

Biscuit Company sells its product for $50. In addition, it has a variable cost ratio of 55 percent and total fixed costs of $6,875. How many units must be sold in order to obtain a before-tax profit of $12,000?

• A)480 units
• B)240 units
• C)600 units
• D)839 units

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Definitions:

Stock Issuance

The process by which a company distributes new shares to investors, thereby raising capital.

Treasury Shares

Shares that were issued and subsequently reacquired by the issuing corporation, but not retired, reducing the amount of outstanding stock on the open market.

Adjusted Book Value

An asset's book value after accounting for factors like depreciation, amortization, or impairment that affect its original cost.

Primary Beneficiary

The main individual or entity designated to receive the benefits from a will, trust, insurance policy, or financial plan.