Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Nie wedding cake to just break even?
A)$56.44
B)$306.98
C)$23.50
D)$371.45

Question

Quizplus · Accepted Answer

To calculate the break-even point, we need to add up all of the avoidable costs:

$40.00 (direct materials) + $15.00 (direct labor) + $36.00 (allocated overhead) + $215.98 (opportunity cost) = $306.98

Therefore, the company would need to charge at least $306.98 for the Nie wedding cake to break even. Choice B is the only option that matches this amount.

Assuming That All of the Costs Listed Above Are Avoidable