Financial and Managerial Accounting
15th Edition
ISBN: 9780357297162
Author: Carl S. Warren; Jefferson P. Jones; William B. Tayler, Ph.D., CMA
Publisher: Cengage Learning US
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Textbook Question
Chapter 20, Problem 3CMA
Bolger and Co. manufactures large gaskets for the turbine industry. Bolger’s per-unit sales price and variable costs for the current year are as follows:
Bolger’s total fixed costs aggregate to $360,000. Bolger’s labor agreement is expiring at the end of the year, and management is concerned about the effects of a new labor agreement on its break-even point in units. The controller performed a sensitivity analysis to ascertain the estimated effect of a $10-per-unit direct labor increase and a $10,000 reduction in fixed costs. Based on these data, the break-even point would:
- a. decrease by 1,000 units.
- b. decrease by 125 units.
- c. increase by 375 units.
- d. increase by 500 units.
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Chapter 20 Solutions
Financial and Managerial Accounting
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