Nickelby Sells Its Single Product for $14 Per Unit, and Its

question 14

Multiple Choice

Nickelby sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Which of the following actions will move Point B lower on the y axis?

• A) An increase in the price of materials.
• B) A decrease in the number of units sold.
• C) Paying sales staff a commission instead of salary.
• D) An increase in variable overhead cost.

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Definitions:

Owner

An individual or entity that holds legal title to an asset or property, having the rights to use, sell, or lease it.

Constant Growth Model

A version of the dividend discount model that assumes dividends grow at a constant rate indefinitely, used to estimate the value of a stock.

Market Return

Market return is the profit or loss generated from investing in the stock market, typically measured as the percentage change in investment value over a specific period.

Preemptive Rights

The rights that allow existing shareholders to purchase additional shares before new shares are offered to the public, to maintain their proportionate ownership in the company.