Assume a Firm Is Developing, Manufacturing, and Selling a Basic

question 161

Multiple Choice

Assume a firm is developing, manufacturing, and selling a basic software package at $500 per copy. Raw materials and direct labor total $200 per copy. Fixed costs are $250,000. If the firm sells 5,000 units per year, what will be the operating profit?

• A) $1,250,000
• B) $1,500,000
• C) $2,250,000
• D) $2,500,000

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Definitions:

Boom Economy

A period characterized by rapid economic growth, significant increases in jobs, and elevated consumer spending.

Recessionary Period

A period of economic decline during which trade and industrial activity are reduced, typically recognized by a fall in GDP in two successive quarters.

Standard Deviation

A measure of the dispersion or variability in a set of data points or investment returns, indicating how much variation exists from the average.

Expected Return

The anticipated average return of an investment over a given period, factoring in all possible outcomes.