Stephanie Inc

question 2

Multiple Choice

Stephanie Inc. sells its product for $40. The variable costs are $18 per unit. Fixed costs are $16000. The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5000 in fixed costs. Which of the following is true about the break-even point in units?

• A) It will remain unchanged.
• B) It will decrease.
• C) It will increase.
• D) It cannot be determined from the information provided.

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Definitions:

Bonds Mature

The point in time when a bond's principal amount is due to be paid back to bondholders, ending the bond's life.

Straight-Line Method

The straight-line method is a depreciation technique that allocates an even amount of depreciation expense over the useful life of an asset.

Amortization of Bond Discount

The gradual reduction or write-off of the difference between the face value and the lower issuing price of a bond over its term, impacting the issuer's financial statements.

Interest Expense

The financial obligation incurred from borrowing money over a set time frame.