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

question 62

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.What is the difference in break-even points for the Large model between Tuttle and San Francisco?

• A) Fewer than 25,000 units
• B) Between 25,000 units and 40,000 units
• C) Between 40,000 units and 55,000 units
• D) More than 55,000 units

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Definitions:

Allantois

An extra-embryonic membrane in birds and reptiles, involved in gas exchange and waste storage during development.

Amnion

A membranous sac that surrounds and protects an embryo or fetus in the amniotic cavity of vertebrates.

Yolk Sac

An extra-embryonic membrane in many vertebrates that provides food for the embryo via absorbed nutrients.

Gas Exchange

The biological process through which organisms exchange oxygen and carbon dioxide with their environment, typically occurring in the lungs or gills.