Memory Division of Missing Byte,Inc

question 42

Multiple Choice

Memory Division of Missing Byte,Inc. The Memory Division of Missing Byte,Inc.produces a high-quality computer chip.Unit production costs (based on capacity production of 100,000 units per year) follow:
Refer to Memory Division of Missing Byte,Inc.Assume,for this question only,that the Memory Division is producing and selling at capacity.What is the minimum selling price that the division would consider on a "special order" of 1,000 chips on which no variable period costs would be incurred?

• A)$100
• B)$72
• C)$81
• D)$94

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Definitions:

Common Stock

A form of corporate equity ownership, a type of security representing ownership in a corporation.

Market Price

The rate at which an asset or service is exchanged in a competitive marketplace.

Marginal Tax Rate

The tax rate incurred on an additional dollar of income, reflecting the rate applicable to the highest portion of an individual's or corporation's income.

Capital Structure

The mix of different forms of external financing a firm uses, such as debt, equity, and other securities, to fund its operations and growth.