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:

Producing

The act or process of creating goods or services using inputs like labor, materials, and machines.

Maximum Weekly Profit

The highest amount of financial gain a business can achieve in one week, based on its revenue and costs.

Market Price

The existing cost at which a service or asset is available for purchase or sale on the open market.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship.