Casey Company Has Fixed Costs of $1,500,000 and Variable Costs

question 68

Multiple Choice

Casey Company has fixed costs of $1,500,000 and variable costs are 40% of sales. What are the required sales if Casey Company desires net income of $150,000?

• A) $2,750,000
• B) $2,500,000
• C) $4,125,000
• D) $3,750,000

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Definitions:

Franchise Arrangements

Business models where a party (the franchisee) is allowed to use the trademark and business systems of another party (the franchisor) in return for a fee and adherence to specific operating principles.

Service-Sponsored Franchise Systems

A franchising approach where the franchisor provides a licensed privilege to the franchisee to do business and offers support services such as branding and training.

Wholesaler-Sponsored Voluntary Chains

Networks of independent retailers that voluntarily organize under a wholesaler to achieve economies of scale and marketing advantages.

Manufacturer-Sponsored Retail Franchise System

A retail model where manufacturers support and brand franchise stores, allowing them to sell their products exclusively.