IMA Shop Ltd Produces Three Products The Weighted Average Contribution Margin, Rounded to the Nearest Whole

question 25

Multiple Choice

IMA Shop Ltd produces three products. Cost, price, and volume data is shown below:
* Total Fixed Costs: $2,400
* Tax Rate: 30%
$$\begin{array} { | l | l | l | l | } \hline & \text { Chacolate Ice Creamn } & \text { Milkthale } & \text { Furger } \\\hline \text { Narmal Valume } & 300 & 150 & 200 \\\hline \text { Price per unit } & \$ 5 & \$ 7 & \$ 10 \\\hline \text { Var iable cast per unit } & \$ 2 & \$ 3 & \$ 4 \\\hline\end{array}$$ The weighted average contribution margin, rounded to the nearest whole dollar, is

• A) $13
• B) $4.16
• C) $1.85
• D) $4.33

Calculate economic profits or losses based on price, average cost, and output levels.

Explain the role of fixed and variable costs in the firm's short-run production decisions.

Understand the impact of market demand on equilibrium price in a purely competitive market.

Compare short-run and long-run decision-making in purely competitive firms.

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Definitions:

IRA

Individual Retirement Account, a tax-advantaged investing tool that individuals use to earmark funds for retirement savings.

After taxes

Refers to the net income after all tax expenses have been deducted.

Compounded Monthly

A method of calculating interest whereby the accumulated interest is added back to the principal sum, and future interest is calculated on the new total each month.

Student Loans

Borrowed money that is used to pay for higher education expenses, which must be repaid with interest.