Minor Video Has Opened a New Store Renting Videocassettes

question 96

Multiple Choice

Minor Video has opened a new store renting videocassettes. Fixed costs are $60,000, and the variable cost per unit is $1.50. The average sale is $5 per customer. Use the following axes to determine the break-even quantity graphically. Next, refine your solution by solving it algebraically.

• A) The break-even quantity is fewer than or equal to 10,000 rentals.
• B) The break-even quantity is more than 10,000 rentals and fewer than or equal to 20,000 rentals.
• C) The break-even quantity is more than 20,000 rentals and fewer than or equal to 25,000 rentals.
• D) The break-even quantity is more than 25,000 rentals.

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Definitions:

Revenue

The sum of all revenue a company earns from selling products or providing services within a specified timeframe.

Expense

Costs incurred in the process of generating revenue, reflected in the income statement.

Asset

An economic resource owned or controlled by an individual or corporation, expected to provide future benefits.

Liability

Economic responsibilities or liabilities an organization has to other parties, which require repayment over a period via the exchange of economic assets.