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:

Rapidly

Occurring in a short time or at a fast pace.

Maximizing

The strategy of seeking the best possible outcome or the highest possible utility when making a decision.

Availability Heuristic

A cognitive bias that causes people to overestimate the probability of events associated with memorable or vivid examples.

Satisficing

A decision-making strategy that entails selecting the first option that meets a minimum set of criteria, rather than optimizing.