A Company Faces Fixed Costs of $100,000 and Variable Costs

question 128

Multiple Choice

A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?

• A) 20,000
• B) 25,000
• C) 30,000
• D) 35,000
• E) 40,000

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Definitions:

Independent Variable

A variable in an experiment or model that is manipulated to observe its effect on the dependent variable.

Dependent Variable

A variable in experimental and statistical modeling whose value is dependent on the influence of another variable (the independent variable).

Coefficient Of Determination

A statistic that indicates the proportion of the variance in the dependent variable that is predictable from the independent variable(s).

Estimated Regression Equation

A formula that represents the relationship between dependent and independent variables and is used to predict the value of the dependent variable.