The Fixed Cost of Allied Breads, a Bread Baking Company

question 49

Multiple Choice

The fixed cost of Allied Breads, a bread baking company, is $200,000 per year. The cost of equipment and labor to make one packet of bread is $3. If the breakeven point of the company is 100,000 packets of bread, Widget Corp. needs to sell its bread packets at a price of _____ per packet to make profits.

• A) at least $7
• B) at least $6
• C) less than $4
• D) more than $5

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Definitions:

Portfolio

A group of investments that comprise stocks, bonds, commodities, along with cash and cash equivalents such as mutual funds and exchange-traded funds (ETFs).

Coefficient of Correlation

A statistical measure that indicates the extent to which two variables change together.

Probability Distribution

A mathematical function outlining every potential value and associated probabilities a random variable may assume in a specified interval.

Return on Stock

The gain or loss on a stock investment, expressed as a percentage of the investment’s initial cost.