-Based Upon the Above Table, If Disposable Income Is $400

question 240

Multiple Choice

$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Disposable income } \\\text { (billions of dollars) }\end{array} & \begin{array} { l } \text { Consumption } \\\text { exp enditure } \\\text { (billions of dollars) }\end{array} \\\hline 400 & 450 \\\hline 600 & 600 \\\hline 800 & 750 \\\hline 1000 & 900 \\\hline 1200 & 1050 \\\hline\end{array}$$
-Based upon the above table, if disposable income is $400 billion, saving equals

• A) $0 billion.
• B) $100 billion.
• C) -$50 billion.
• D) $50 billion.

---

Definitions:

Total Fixed Manufacturing

The summation of all the costs that do not change with the level of production, including salaries, rent, and insurance.

Profit Margin

A component of the rate of return on investment, computed as the ratio of income from operations to sales.

Market Selling Price

The price at which a product is sold to the public, determined by supply, demand, and other market factors.

Target Costing

The target cost is determined by subtracting a desired profit from a market-determined price. The resulting target cost is used to motivate cost improvements in design and manufacture.