Montoya Manufacturing Has Fixed Costs of $3000000 and Variable Costs

question 47

Multiple Choice

Montoya Manufacturing has fixed costs of $3000000 and variable costs are 40% of sales. What are the required sales if Montoya desires net income of $300000?

• A) $5500000
• B) $5000000
• C) $8250000
• D) $7500000

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Definitions:

Price-Elastic

Describing a situation where the demand for a product significantly changes in response to changes in its price.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded by consumers, normally downward sloping.

Revenue

The income that a business receives from its normal business activities, usually from the sale of goods and services to customers.

Price Elasticity

An indicator of the degree to which demand for a product is affected by variations in its price, reflecting consumer sensitivity to price fluctuations.