A Company Incurs Fixed Costs of $35,000 and Average Variable

question 45

Multiple Choice

A company incurs fixed costs of $35,000 and average variable costs of $7 per item. This company sells 10,000 units and just breaks even. The unit selling price for the product is:

• A) $10.00
• B) $7.35
• C) $17.00
• D) $10.50

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Definitions:

Net Sales

This is the amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and any discounts allowed.

Gross Profit

The difference between revenue and the cost of goods sold before accounting for certain other costs.

Net Sales

The revenue from sales after deducting returned goods, allowances for damaged or missing goods, and any discounts allowed.

Cost Of Goods Sold

The expenditures directly associated with manufacturing goods that a company sells, consisting of materials and labor.