Wilkes Manufacturing Sells One Product with a Variable Unit Cost

question 83

Multiple Choice

Wilkes Manufacturing sells one product with a variable unit cost of $18. The company knows that the price charged will affect demand. Fixed costs are $275,000. If sales exceed 50,000 units, the company will need to lease additional manufacturing space and equipment at an additional cost of $100,000 per year. The following chart represents the estimated demand at various price levels: $$\begin{array} { c c } \text { Units Demanded } & \text { Unit Price } \\25,000 & \$ 30 \\50,000 & \$ 28 \\75,000 & \$ 25 \\100,000 & \$ 23\end{array}$$ Based on this information which of the following statements is true?

• A) Selling the units at $23 will generate the largest profit.
• B) Selling the units at either $23 or $28 will generate a profit of $225,000.
• C) Selling the units at either $25 or $28 will generate a profit of $225,000.
• D) Selling the units at $28 will generate the largest profit.

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Definitions:

Legitimate Power

The degree to which a person has the right to ask others to do things that are considered within the scope of their authority.

Silverback Gorilla

A mature, male gorilla, known for its distinct silver-colored hair on its back, signifying leadership and strength in a gorilla group.

Family Hierarchy

The structured order of authority and responsibility within a family, often based on age, gender, or social roles.

Coercive Power

The ability to control others through the fear of punishment or threat, often used in organizational or leadership contexts.