The Chief Engineer at Wilson Electronics Has Proposed the Production

question 60

Multiple Choice

The chief engineer at Wilson Electronics has proposed the production of a digipad to be sold at a 30 percent markup.Management estimates that the fixed costs per year will be $150,000 and the variable cost of the digipad will be $28 per unit.If Wilson sells 30,000 digipads, how much is the selling price of each digipad?

• A)$42.90
• B)$33.00
• C)$36.40
• D)$9.90

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Definitions:

Fixed Expenses

Costs that remain constant in total regardless of changes in the level of activity or volume of output.

Break-even Sales

The amount of revenue required to cover all fixed and variable costs associated with running a business, resulting in neither profit nor loss.

Northern Division

A geographical or organizational segment of a company responsible for operations in the northern region.

Fixed Expenses

Costs that do not change in total with the level of activity or production volume within a relevant period.