Congress Company Has Identified Two Methods for Producing Playing Cards

question 26

Multiple Choice

Congress Company has identified two methods for producing playing cards.One method involves using a machine having a fixed cost of $10,000 and variable costs of $1.00 per deck of cards.The other method would use a less expensive machine If the selling price per deck of cards will be the same under each method, at what level of output will the two methods produce the same net operating income (EBIT) ?

• A)5,000 decks
• B)10,000 decks
• C)15,000 decks
• D)20,000 decks
• E)25,000 decks

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Definitions:

Population

Population refers to the total number of people living in a particular area or country at a specific time.

GDP Deflator

An economic metric that converts output measured at current prices into constant-dollar GDP, essentially adjusting for inflation and allowing for comparisons across time periods by reflecting the prices of all goods and services produced domestically.

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy in a year, used to deflate nominal GDP to real GDP.

Real GDP

Gross Domestic Product adjusted for inflation, providing a more accurate representation of an economy's size and growth over time.