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crackcpa
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Posted: 25 May 2011 at 12:26 \| IP Logged

Hi,

who can explain the answer? total sales revenue is $600,000, but the information given total variable cost and fixed cost is 540,000. I think the question itself does not give the same revenue amount, so the answer could be different. The answer is A. 180,000, but I got answer of 300,000.

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Oslo Co.’s industrial photo-finishing division, Rho, incurred the following costs and expenses in 2008:

	Variable	Fixed
Direct materials	$200,000
Direct photo-finishing labor	150,000
Factory overhead	70,000	42,000
General, selling, and administrative	30,000	48,000
Totals	$450,000	$90,000

During 2006, Rho produced 300,000 units of industrial photo-prints, which were sold for $2.00 each. Oslo’s investment in Rho was $500,000 and $700,000 at January 1, 2008, and December 31, 2008, respectively. Oslo normally imputes interest on investments at 15% of average invested capital. How many industrial photo-print units did Rho have to sell in 2008 to break even?

< id=Answer value=7215 = name=Answer>A. 180,000
< id=Answer value=7216 = name=Answer>B. 120,000
< id=Answer value=7217 = name=Answer>C. 90,000
< id=Answer value=7218 = name=Answer>D. 60,000

nolifecpa
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Posted: 25 May 2011 at 14:52 \| IP Logged

i think i know why it is $180,000

break even formula is = fixed cost/(sale price per unit - variable cost per unit)

fixed cost = $90,000

sales price = $2

variable cost per unit = $450,000/300,000 units produced = $1.50

$90,000/($2 - $1.50) = $180,000

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seodeep
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Posted: 28 May 2011 at 07:59 \| IP Logged

Confused

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