Reference no: EM132565391

James Company has the following information related to its manufacturing and selling of staplers.

Current selling price, per unit                $6.00

Direct materials, per unit                       $2.00

Direct labor, per unit                              $1.00

Variable manufacturing overhead, per unit   $1.00

Variable operating expense                         $1.00

Fixed manufacturing overhead                   $20,000

Fixed operating expenses                              $5,000

Question 1: Which of the following are true regarding the assumptions of James Company's cost-volume-profit analysis? (Check all that apply.)

Fixed manufacturing overhead of $20,000 is sufficient to achieve the break-even volume.

If variable costs change, direct labor costs will be half of direct materials costs.