John Anderson Company Below Is an Income Statement for John

question 106

Multiple Choice

John Anderson Company Below is an income statement for John Anderson Company:
$\begin{array}{ll}\text { Sales } & \$ 300,000 \\\text { Variable costs } & \underline{(150,000) } \\\text { Contribution margin } & \$ 150,000 \\\text { Fixed costs } & \underline{(100,000) } \\\text { Profit before taxes } & \underline{\$ 50,000}\end{array}$ Refer to John Anderson Company.If the unit sales price for John Anderson's sole product was $10,how many units would it have needed to sell to produce a profit of $40,000?

• A)27,500
• B)29,000
• C)28,000
• D)can't be determined from the information given

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Definitions:

Variable Input

An input in the production process that varies with the level of output, such as labor or raw materials.

Marginal Product

The increase in output resulting from a one-unit increase in the use of a particular input, while holding other inputs constant.

Average Product

The output produced, on average, by each unit of a variable input, such as labor or capital, in the production process.

Total Product

Total product refers to the total quantity of output that a firm produces over a given period, typically in relation to varying levels of input.