Exhibit 11-2 in Exhibit 11-2, Total Earnings at Equilibrium

question 31

Multiple Choice

Exhibit 11-2 In Exhibit 11-2, total earnings at equilibrium equal

• A)$40
• B)$80
• C)$160
• D)$16
• E)$8

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Definitions:

Variable Cost Per Unit

This is the cost that varies with each unit produced, including materials, labor, and other direct costs.

Total Fixed Costs

The sum of all costs that do not change with the level of output or activity within a certain period.

Cost-Volume-Profit Analysis

The examination of the relationships among selling prices, sales and production volume, costs, expenses, and profits.

Contribution Margin

The amount of revenue remaining after deducting variable costs, which contributes to covering fixed costs and generating profit.