Minor Video Has Opened a New Store Renting Videocassettes

question 25

Multiple Choice

Minor Video has opened a new store renting videocassettes.Fixed costs are $60,000,and the variable cost per unit is $1.50.The average sale is $5 per customer.Use the following axes to determine the break-even quantity graphically.Next,refine your solution by solving it algebraically.(Show your work for credit.)

• A) The break-even quantity is fewer than or equal to 10,000 rentals.
• B) The break-even quantity is more than 10,000 rentals and fewer than or equal to 20,000 rentals.
• C) The break-even quantity is more than 20,000 rentals and fewer than or equal to 25,000 rentals.
• D) The break-even quantity is more than 25,000 rentals.

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Definitions:

Experience Adjustments

Changes to actuarial assumptions regarding pensions or other post-employment benefits based on differences between prior predictions and actual experience.

Actuarial Assumptions

Assumptions about future events affecting pension and insurance contracts, used to estimate the value of liabilities and premiums.

Defined Contribution Plans

Post-employment plans for which an employer pays fixed contributions into a separate entity (e.g., superannuation fund) on behalf of the employee.

Superannuation Fund

A superannuation fund is a pension program created by a company for the benefit of its employees, primarily practiced in Australia.