The Actual Volume and Volume Estimated in a Business Plan

question 4

Multiple Choice

The actual volume and volume estimated in a business plan are 60,000 units and 55,000 units,respectively.If the volume variance of the business works out to $30,000,calculate the margin per unit estimated in the plan.

• A)$6
• B)$10
• C)$15
• D)$18.5
• E)$24.5

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Definitions:

Profit-Maximizing

The process by which a company determines the price and output level that returns the greatest profit.

Long Run

A period in economics where all factors of production and costs are variable, allowing for full adjustment to changes.

ATC

Average Total Cost; the per unit cost of production, calculated by dividing the total cost by the quantity produced.

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical.