Sutton Company Produces Flash Drives for Computers, Which It Sells

question 136

Multiple Choice

Sutton Company produces flash drives for computers, which it sells for $20 each. The variable cost to make each flash drive is $6. During April, 700 drives were sold. Fixed costs for April were $2 per unit for a total of $1,400 for the month. How much is the monthly break-even level of sales in dollars for Sutton Company?

• A) $100
• B) $2,000
• C) $7,000
• D) $4,200

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Definitions:

Debt-to-Equity Ratio

A financial metric indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Return on Equity

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Return on Assets

A financial ratio that measures how efficiently a company uses its assets to generate net income, typically expressed as net income divided by total assets.

Return on Debt

An assessment of the profitability relative to the amount of debt used, often calculated as the interest rate or yield on the debt instrument.