Information for questions 19 and 20: Briar Tek has fixed costs of $700,000. Sell
ID: 2665736 • Letter: I
Question
Information for questions 19 and 20: Briar Tek has fixed costs of $700,000. Selling price per unit is $180 and Variable cost per unit is $110.19: How many units must Briar Tek Sell to earn a profit of $560,000?
A. 10,000
B. 14,000
C. 18,000
D. 20,000
20: A new employee suggests that Briar Tek sponsor a little league baseball team as a form of advertising. The cost to sponsor the team is $3,500. How many more units must be sold to cover this cost?
A. 25
B. 40
C. 50
D. 45
21. When activity based costing is implemented, the initial outcome is normally that:
A. the cost of all products will be higher.
B. The cost of all products will be lower
C. The cost of low volume products will be higher and the cost of high volume products will be lower
D. The cost of low volume products will be lower and the cost of high volume products will be higher.
Explanation / Answer
19: How many units must Briar Tek Sell to earn a profit of $560,000?Option "c " is the correct answer . Required sales = Variable cost + Fixed cost + Target Net income 180*x = 110*x+ 700000+560000 70x = 1260000 X(required units ) = 1260000 /70 = 18000 units 20. new employee suggests that Briar Tek sponsor a little league baseball team as a form of advertising. The cost to sponsor the team is $3,500. How many more units must be sold to cover this cost? option "C" is the correct answer
180*x = 110*x+ 700000+3500 = 10050 units Break even units = 10000 So the additional units required = 50 21. When activity based costing is implemented, the initial outcome is normally that: ption "C" s the correct answer.
OThe cost of low volume products will be higher and the cost of high volume products will be lower