Refer to the Following:
the Capital Stock Is Fixed at 40

question 10

Multiple Choice

Refer to the following:
The capital stock is fixed at 40 units, the price of capital is $15 per unit, and the price of labor is $80 per unit.
$$\begin{array} { c c } \text { units of } & \text { units of } \\\text { Labor } & \text { Output } \\\hline 5 & 40 \\10 & 100 \\15 & 180 \\20 & 220\end{array}$$
-If the firm produces 180 units of output, what is total variable cost?

• A) $1,200
• B) $1,800
• C) $14,400
• D) $17,100
• E) none of the above

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Definitions:

Gross Margin Ratio

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold; used to assess a company's financial health.

Return on Common Stockholders' Equity

A financial ratio that measures the profitability generated from the common stockholders' equity investment, indicating how efficiently equity capital is being utilized.

Total Asset Turnover

Total asset turnover measures how efficiently a company uses its assets to generate sales, calculated as sales divided by average total assets.

Inventory Turnover

A ratio indicating how many times a company's inventory is sold and replaced over a period, used to assess efficiency in managing and selling products.