Andrew Is Interested in Entering the Catfish Farming Business

question 4

Multiple Choice

Andrew is interested in entering the catfish farming business.He estimates if he enters this business,his fixed costs would be $50,000 per year and his variable costs would equal 30 percent of sales.If each catfish sells for $2,how many catfish would Andrew need to sell to generate a profit that is equal to 10 percent of sales?

• A)40,000
• B)41,667
• C)35,000
• D)No level of sales can generate a 10 percent net return on sales.

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Definitions:

Beginning Inventory

The financial value of stock prepared for transaction at the start of a bookkeeping period.

Worksheet

An informal document used within an accounting system to collate all data for financial statements preparation, aiding in the adjustment and closing process.

Merchandising Company

A business that sells finished goods to consumers, making profits through the buying and selling activities.

Inventory

The total of all goods available for sale or use, including raw materials, work-in-progress, and finished goods.