Luvmatics Plans to Produce a New Product -Use the Information in Table A

question 13

Multiple Choice

Luvmatics plans to produce a new product. Three different models are planned: the Regular, Large, and Jumbo. The fixed costs depend on which of two locations are used; in San Francisco the fixed costs would be $2.5 million per year, but in Tuttle the fixed costs would be $1.2 million. Sale prices and variable costs for the three models are shown in the table.
$$\begin{array} { | l | c | c | c | } \hline \text { Table A 1 } & & { \text { Model } } \\\hline \text { } & \text { Regular } & \text { Large } & \text { Jumbo } \\\text { Variable Cost} & \$ 5 \text { /unit }& \$ 7 \text { /unit } & \$ 10 / \text { unit } \\\text { Sale Price } & \$ 25 / \text { unit } & \$ 41 \text { /unit } & \$ 68 / \text { unit } \\\hline\end{array}$$
-Use the information in Table A.1.How many units of the Regular size must be sold each year to break even if production is at the San Francisco plant?

• A) Fewer than 30,000 units
• B) More than 30,000 units but fewer than 80,000 units
• C) More than 80,000 units but fewer than 130,000 units
• D) More than 130,000 units

---

Definitions:

Economic Value

The worth of a good or service determined by the market, reflecting its utility, scarcity, and consumers' willingness to pay.

Equivalent

Equal in value, measure, force, effect, significance, etc.

Missing Value

A term used in statistics and data analysis to denote a data point that is not recorded or is unknown.

Calculate

To determine the amount or number of something by mathematical means.