Beach Surf Boards Is Making a Decision on Whether to Add

question 41

Multiple Choice

Beach Surf Boards is making a decision on whether to add long boards as a new product line to complement its short boards.A recent analysis determined that the average long board can be sold for $300.00 with unit variable costs of $225.Fixed costs are currently $51,000 per month but would be increased to $69,000 if long boards are added.How much is incremental profit or (loss) if long boards are added and its sales volume is expected to be 250?

• A)$750
• B)$18,750
• C)($32,250)
• D)($50,250)

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Definitions:

Large Borrowers

Individuals or entities that take out significant loans from financial institutions, often with substantial collateral and terms of agreement.

Exchange Rate Risk

The potential for loss due to fluctuations in the exchange rates between currencies, affecting companies that engage in international business.

International Operations

Business activities conducted in more than one country, involving cross-border transactions of goods, services, or capital.

International Fisher Effect

An economic theory stating that the difference in nominal interest rates between two countries is proportional to the expected change in the exchange rate between their currencies.