Thomas Company Had the Following Information -How Many Units Need to Be Sold to Produce a Driver}}

Thomas Company had the following information: $\begin{array}{lcc} \underline{\text { Activity Driver}}& \underline{\text { Unit Variable Cost }}&\underline{\text { Level of Activity Driver}}\\\text { Units sold } & \$ 20 & -- \\\text { Setups } & 1,000 & 80 \\\text { Engineering hours } & 60 &2,000 \\\text { Other data: } & &\end{array}$

$\begin{array}{lc}\text { Total fixed costs (traditional) } & \$ 800,000 \\\text { Total fixed costs (ABC) } & \$ 400,000 \\\text { Unit selling price } & \$ 40\end{array}$
-How many units need to be sold to produce a before-tax profit of $120,000 using ABC?

A) 21,000 units
B) 36,000 units
C) 51,000 units
D) 81,000 units

Correct Answer:

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