Answer the following questions using the information below:

Ms. Janice Meyers, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2011 is as follows:

-What are breakeven sales in units using absorption costing?
A) 5,625 units
B) 6,667 units
C) 6,897 units
D) 8,000 units

Question

Answer the following questions using the information below:

Ms. Janice Meyers, the company president, has heard that there are multiple breakeven points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for 2011 is as follows:

-What are breakeven sales in units using absorption costing?
A) 5,625 units 
B) 6,667 units 
C) 6,897 units 
D) 8,000 units

Quizplus · Accepted Answer

To find the breakeven point using absorption costing, we need to use the formula:
Breakeven Sales in Units = Fixed Costs / (Price per unit - Variable costs per unit)
Fixed costs = $41,000
Price per unit = $15
Variable costs per unit = $6 + $2 = $8
Breakeven Sales in Units = $41,000 / ($15 - $8) = 6,897 units. Thus, the answer is C.

Answer the Following Questions Using the Information Below