After an Intensive Research and Development Effort, Two Methods for Producing

question 96

Multiple Choice

After an intensive research and development effort, two methods for producing playing cards have been identified by the Turner Company.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 (fixed cost = $5,000) , but it would require greater variable costs ($1.50 per deck of cards) .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:

Nutrients

Substances obtained from food that are essential for the body to function and maintain health.

Oxygen

A chemical element (O) essential for cellular respiration in living organisms and a component of the earth's atmosphere.

Maternal Blood

Blood circulating in a pregnant woman that provides nutrients and oxygen to both the mother and the fetus.

Embryonic Blood

Blood cells that are present in an embryo, fundamental in the development of the circulatory system.