Reference no: EM132565292
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.)
Option A. Fixed manufacturing overhead of $20,000 is sufficient to achieve the break-even volume.
Option B. Fixed operating expenses of $5,000 are sufficient to achieve the break-even volume.
Option C. Demand will be sufficient to warrant an average price of $6 per unit.
Option D. If variable costs change, direct labor costs will be half of direct materials costs.