Scenario 13-2

question 110

Multiple Choice

Scenario 13-2. Benjamin has been running his kennel service for one year. So far, business has been good and all expenses have been met each month, leaving a small profit. He has a large building capable of handling a total of 35 dogs. Each pen has fresh water supplied through pipes, an automated feeder, and a heating/cooling unit that keeps each pen at a comfortable 68 degrees. Benjamin rents each pen at a price of $30 per day. His total fixed costs each month are $500. Average variable costs are $12.
-In Scenario 13-2, if Benjamin's fixed costs were to rise to $600 per month while all other variables remained the same, what would Benjamin's target return in pen rentals be, using a monthly profit target of $2,000?

• A) 140 pen rentals each month
• B) 145 pen rentals each month
• C) 150 pen rentals each month
• D) 155 pen rentals each month

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Definitions:

Statement of Changes

A financial report detailing the changes in equity of a company over a period, including transactions with shareholders and comprehensive income.

Stockholders' Equity

A company's net worth derived from the difference between its total assets and total liabilities, representing the ownership interest of its shareholders.

Consumable Items

Items that are intended to be used up and replaced in a short period of time, often part of operating supplies.

Expired Costs

Costs that have been incurred and cannot be recovered, often through the consumption of goods or by providing services in a given period.