Kelly Co Incurs $465,000 in Fixed Costs While Producing Three Products

question 73

Multiple Choice

Kelly Co. incurs $465,000 in fixed costs while producing three products with the following characteristics: $$\begin{array} { | l | c | c | c | } \hline \text { Product } & \text { Sales Mix (units) } & \begin{array} { c } \text { Contribution } \\\text { Mar gin per unit }\end{array} & \begin{array} { c } \text { Contribution } \\\text { Margin Ratin }\end{array} \\\hline \text { Srnall } & 5 & \$ 300 & 25 \% \\\hline \text { Medium } & 3 & \$ 200 & 30 \% \\\hline \text { Larpe } & 2 & \$ 500 & 40 \% \\\hline\end{array}$$ What is the breakeven point in units?

• A) 1,500
• B) 390
• C) 1,165
• D) 800

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Definitions:

Aggregate Output

A composite measure of all final goods and services produced in an economy during a given period; real GDP.

Aggregate Demand Curve

A curve that shows the relationship between the overall price level and the total demand for all goods and services in an economy.

Nominal Income

The total amount of money earned by an individual or entity before adjustments for inflation or deflation.

Leading Economic Indicators

Variables that predict, or lead to, a recession or recovery; examples include consumer confidence, stock market prices, business investment, and big-ticket purchases, such as automobiles and homes.