Refer to the Following Table: the Optimal Level of Activity

question 63

Multiple Choice

Refer to the following table: The optimal level of activity is:

• A)2
• B)3
• C)4
• D)5
• E)There is no optimal level in this case because marginal benefit does not equal marginal cost at any of the activity levels.

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Definitions:

Sales Revenue

The full income received from goods sales or service delivery before taking out any operational costs or expenditures.

Return On Investment

A financial metric that calculates the profitability of an investment by dividing the profit (or loss) by the cost of the investment.

Imputed Interest Rate

An estimated interest rate used when the actual interest rate is not known or is not applicable, often used in lease agreements or for calculating the present value.

Divisional Contribution Margin

The difference between sales revenue and variable costs in a specific business division, used to cover fixed expenses and contribute to profits.