Figure 4-4

question 110

Multiple Choice

Figure 4-4.Yerke Company makes jungle gyms and tree houses for children. For jungle gyms, the price is $120 and variable expenses are $90 per unit. For tree houses, the price is $200 and variable expenses are $100. Total fixed expenses are $253,750. Last year, Yerke sold 12,000 gyms and 4,000 tree houses.
-Refer to Figure 4-4. Now suppose that Yerke expects tree house demand to increase from 4,000 to 8,000 units. What is the new contribution margin ratio (rounded to two decimal places) ?

• A) 38%
• B) 62%
• C) 40%
• D) 60%
• E) 50%

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Definitions:

Monopoly

A market structure characterized by a single seller who has exclusive control over the supply and pricing of a product or service.

Economic Profit

The profit margin calculated by taking a company's total earnings and subtracting all costs, overt and covert.

Rock Climbing Shoe

A specialized footwear designed for rock climbing that enhances grip and foot support on climbing surfaces.

Monopoly

A market structure characterized by a single seller who has exclusive control over a product or service, leading to limited competition.