Sarah's Computer City Sells 5,000 Boxes of CD- RW Compact

question 90

Multiple Choice

Sarah's Computer City sells 5,000 boxes of CD- RW compact discs per year.She determined that she pays $50 to process an order for discs.Her purchase price is $6 for each box of discs and she has determined that storage costs for one year are 25 percent of the purchase price.What is her approximate economic order quantity?

• A)5,770 boxes
• B)289 boxes
• C)2,890 boxes
• D)409 boxes
• E)577 boxes

Determine the break-even point in units and dollars.

Recognize the impact of changes in cost structures and sales on the break-even point and profitability.

Understand the concept of operating leverage and its effects on profitability.

Calculate the margin of safety and understand its importance in assessing business risk.

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Definitions:

Variable Affects

Refers to influences that can cause changes in outcomes or conditions; these may vary depending on different factors or circumstances.

Vertical Distance

The measurement of space above or below a reference point, often used in geography or describing graph features.

Data Point

An individual value or piece of information that is a part of a larger set of data being analyzed.

Approximating Line

A line that closely estimates or approximates the values or behavior of a more complex curve or dataset.