Can anyone help explain why the $20,000 is not being added to the total fixed costs?
Bruell Electronics Co. is developing a new product for high-voltage electrical flows. The following cost information relates to the product.
Direct Materials: $3.25
Direct Labor: $4.00
Distribution: $0.75
The company will also be absorbing $120,000 of additional fixed-costs associated with this new product. A Corporate fixed charge of $20,000 currently absorbed by other products will be allocated to this new product. If the selling price is $14 per unit, the breakeven point in units (rounded to the nearest hundred) for surge proctors is:
A. 23,300 units
B. 10,000 units
C. 20,000 units
D. 15,000 Units
The answer is C.
Can anyone explain to me why the $20,000 isn't being included in the total fixed cost of $120,000?