DJ Studios Is Considering Opening a New Location

question 212

Multiple Choice

DJ Studios is considering opening a new location. This location is estimated to bring in sales of $398,000 a year with total variable costs of $62,000, total fixed costs of $274,500, and estimated
Unit sales of 1,200. The depreciation expense is $18,900 a year. What is the contribution margin per
Unit?

• A) $103
• B) $117
• C) $280
• D) $284
• E) $291

---

Definitions:

Ultra Vires

An act that is beyond the legal authority or power of a legislature or corporate body.

Corporate Borrowing

The process by which companies obtain capital through the issuance of debt securities or taking out loans.

Corporation Act

Legislation governing the formation, operation, and dissolution of corporations, detailing their legal rights, capacities, and liabilities.

Indoor Management Rule

A legal principle that protects third parties who enter into contracts with a company, assuming the company's internal rules and procedures have been followed.