Two Firms, C and D, Both Produce Coat Hangers

question 55

Multiple Choice

Two firms, C and D, both produce coat hangers.The price of coat hangers is $1.20 each.Firm C has total fixed costs of $750,000 and variable costs of 30' per coat hanger.Firm D has total fixed costs of $400,000 and variable costs of 50' per coat hanger.The corporate tax rate is 40%.If the economy is strong, each firm will sell 2,000,000 coat hangers.If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy enters a recession, the total revenue of firm C will be

• A)$1,680,000.
• B)$1,400,000.
• C)$2,000,000.
• D)$0.

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Definitions:

Motor Division

A sector or unit within a company that specializes in the development, production, and marketing of motor vehicles or engine components.

Automotive Division

A specialized business unit within a larger company that focuses on the development, manufacturing, and sales of automotive vehicles and related services.

Transfer Price

The price at which goods and services are sold between departments within the same company or between subsidiaries.

Commercial Security Division

A branch of a company focused on providing security products and services to businesses and commercial properties.