Dake Corporation's Relevant Range of Activity Is 3,800 Units to 9,000

question 131

Multiple Choice

Dake Corporation's relevant range of activity is 3,800 units to 9,000 units. When it produces and sells 6,400 units, its average costs per unit are as follows: For financial reporting purposes, the total amount of product costs incurred to make 6,400 units is closest to:

• A) $97,600
• B) $75,200
• C) $104,000
• D) $22,400

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Definitions:

Systematic Risk

The inherent risk affecting the overall market or a particular sector, which cannot be eliminated through diversification.

Market Risk

The risk of losses in investments due to factors that affect the entire market or asset class, such as economic changes or political events.

Firm-specific Risk

The type of risk that affects a particular company or industry, also known as unsystematic risk.

Diversified Away

The risk that can be reduced or eliminated in a portfolio through investments in a variety of assets, thus not tied to the performance of a single investment.