The Variable Cost of a New Computer Keyboard Is $25

question 25

Multiple Choice

The variable cost of a new computer keyboard is $25 per unit, and the fixed costs to produce the keyboard are $20,000 per year. If the selling price of the keyboard is $45, how many units must the company sell to break even?

• A) 800 units
• B) 445 units
• C) 2000 units
• D) 1000 units
• E) None of the above

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Definitions:

Total Assets

The sum of all assets owned by a company, including cash, investments, equipment, and real estate.

EBIT

Earnings Before Interest and Taxes, a financial metric that calculates a company's profitability based on operations, excluding interest and taxes.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is considered when financing its overall operations and growth.

Economic Expansion

A phase of the business cycle where economic activity is increasing, characterized by higher production, employment, and income.