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.