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Chapter 4

# Chapter 4 - 1...

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Chapter 4 Response Pad Questions 1 Mendall Company has \$350,000 in fixed costs.  Their one product sells for \$10 per unit and the variable costs per unit are \$5.  The target after-tax profit for the current year is \$200,000 and the company has a 20% tax rate.  What is the breakeven point? A 120,000 units B 110,000 units C 70,000 units D I will figure this out by Wed. 2 Mendall Company's fixed costs are still \$350,000 and the selling price is still \$10 per unit. However, the variable cost per unit has increased to \$6.  What is the breakeven point? A 70,000 B 87,500 C 98,200 D I can't think.  My head hurts! 3 If fixed costs for a company increase, what is the effect on breakeven? A The breakeven point does not change. B The breakeven point increases. C The breakeven point decreases. D

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