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NEW QUESTION: 1
Hensley Corporation uses breakeven analysis to study the effects of expansion projects it considers.
Currently, the firm's plastic bag business segment has fixed costs of $120,000, while its unit price per carton is $1.20 and its variable unit cost is $0.60. The firm is considering a new bag machine and an automatic carton folder as modifications to its existing production lines. With the expansion, fixed costs would rise to $240,000, but variable cost would drop to $0.41 per unit. One key benefit is that Hensley can lower its wholesale price to its distributors to $1.05 per carton (i.e., its selling price), and this would likely more than double its market share, as it will become the lowest cost producer. What is the change in the breakeven volume with the proposed project?
A. 175,000 units
B. 0 units
C. 100,000 units
D. 75,000 units
E. 200,000 units
Answer: A
Explanation:
Explanation/Reference:
Explanation:
Calculate the old and new breakeven volumes using the old data and new projections: Old Q(BE)
$120,000/($1.20 - $0.60) = $120,000/$0.60 = 200,000 units.
New Q(BE) = $240,000/($1.05 - $0.41) = $240,000/$0.64 = 375,000 units.
Change in breakeven volume = 375,000 - 200,000 = 175,000 units.

NEW QUESTION: 2
If the Oconee Health Plan reimburses its specialty care physicians (SCPs) under a typical retainer method, then Oconee pays SCPs
A. Aset amount each month, and Oconee reconciles its payment at periodic intervals on the basis of actual utilization
B. Aset amount of cash equivalent to a defined time period's expected reimbursable charges
C. Aseparate amount for each service provided, and the payment amount is based solely on a resource- based relative value scale (RBRVS)
D. Aspecified fee that remains the same regardless of how much or how little time or effort is spent on the medical service performed
Answer: A