Tim Marlow, the Owner of the Clock Works, Wanted to Know

question 144

Multiple Choice

Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Marlow knew that he had total fixed costs of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor and materials. If the price Marlow charges for each of his clocks is $40, what is his break-even point quantity?

• A) 100 clocks
• B) 334 clocks
• C) 500 clocks
• D) 1,000 clocks
• E) 10,000 clocks

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Definitions:

Total Income

The sum of all earnings received by an individual or entity, encompassing wages, salaries, profits, rents, and other forms of earnings.

Progressive Tax

A taxation system where the tax rate increases as the taxable amount or income increases, placing a higher burden on wealthier individuals.

Percentage Of Income

A measure or calculation that represents a portion of a person's income.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (income, spending, etc.), indicating the percentage of total income or spending that is paid in taxes.