Reference: 08-05 Dorian Company Produces and Sells a Single Product. the Product

question 90

Multiple Choice

Reference: 08-05
Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800.
-If the selling price is reduced by 5%, variable expenses reduced by $1.00, and fixe? expenses increased to a total of $38,400, how many units would need to be sold to earn a net income of $21,000?

• A)2,950 units.
• B)1,700 units.
• C)1,000 units.
• D)2,700 units.

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Definitions:

Nondiscriminating

A term used in various contexts to describe actions or policies that apply uniformly to all members of a group without exceptions based on any specific characteristics.

Pure Monopolist's Demand Curve

Represents the market demand curve since the monopolist is the sole provider of the product or service, hence facing the market demand directly.

Inelastic

Describes demand that does not significantly change with a change in price.

Natural Monopoly

A market structure where a single supplier efficiently provides all the goods or services due to high fixed or start-up costs, making it impractical for multiple firms to operate.