Bumper Earned Net Income of $72,000 and Has Fixed Costs

question 7

Multiple Choice

Bumper earned net income of $72,000 and has fixed costs of $36,000.Bumper sold 11,000 units for $30 each and has a 40% contribution margin ratio.What were Bumper's operating income and tax rate?

• A)$96,000; 25%
• B)$120,000; 40%
• C)$270,000; 27%
• D)$162,000; 45%

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Definitions:

Total Utility

The total satisfaction or benefit a consumer receives from consuming a particular quantity of a good or service.

Noncash Gift-giving

The act of giving gifts that do not involve direct monetary exchange, emphasizing the value of thoughtfulness and relationships.

Marginal Utility

Marginal utility refers to the additional satisfaction or utility a consumer receives from consuming one more unit of a good or service.

MU to P Ratio

An alternative expression for the marginal utility to price ratio, assessing the level of satisfaction obtained per unit of expenditure.