Vest Food Co $\begin{array}{lr}\text { Unit selling price } & \$ 10.00 \\\text { Unit variable cost } & 6.00 \\\text { Fixed costs } & 960,000\end{array}$

question 79

Multiple Choice

Vest Food Co.has the following operating data: $\begin{array}{lr}\text { Unit selling price } & \$ 10.00 \\\text { Unit variable cost } & 6.00 \\\text { Fixed costs } & 960,000\end{array}$ ? The company is contemplating moving to another state where direct labor costs can be reduced, thereby reducing the unit variable cost by 10%.The state where the company currently operates has offered to reduce property taxes to encourage Vest to stay.The minimum amount of property tax savings necessary to keep the company, assuming no other changes, would be:

• A) $152,016.
• B) $240,000.
• C) $208,696.
• D) $125,217.

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Definitions:

Break-Even

The point where total expenses match total income, leading to neither a profit nor a loss.

Unit Variable Cost

The cost associated with producing one additional unit of product, including materials, labor, and other variable costs.

Fixed Costs

Overheads like rent, salaries, and insurance that stay the same, irrespective of how much is produced or sold.

Break-Even

The point at which total costs equal total revenues, resulting in no net loss or gain for a business.