MINI-CASE Smith Automotive Is a Company That Produces Component Parts for for Automobile

question 24

Multiple Choice

MINI-CASE
Smith Automotive is a company that produces component parts for automobile engines.A margin of $4 per unit produces fixed expenses of $80 million.The market demand for the component parts is 400 million units per year.
-Mini-Case Question.Determine the margin per unit if the company needs to sell 40 million units in order to break even.

• A)$10 per unit
• B)$8 per unit
• C)$4 per unit
• D)$2 per unit
• E)$1 per unit

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Definitions:

Tariff

A tax imposed by a government on imported or, less commonly, exported goods to control trade volumes, protect domestic industries, or generate revenue.

Macropolitical Risk

The risk of losing money or facing instability due to political changes or instability at a country-wide level, affecting investment and business operations.

Valuation Risk

The potential for a difference between the estimated value of an investment and its actual market value.

Reputational Risk

The potential loss or negative impact a company might experience in its market perception or credibility due to certain events, decisions, or incidents.