A Firm with 60 Percent of Sales Going to Variable

question 57

Multiple Choice

A firm with 60 percent of sales going to variable costs, $1.5 million fixed costs, and $500,000 depreciation would show what accounting profit with sales of $3 million? Ignore taxes.(use the values in dollar)

• A)Zero loss
• B)$370,000 loss
• C)$666,667 Loss
• D)$800,000 loss

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Definitions:

Property Taxes

Taxes imposed on property ownership, typically assessed by local governments and based on the property's value.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits that could have been obtained by taking an alternative action.

Variable Cost

Costs that change in proportion to the level of activity or volume of production, such as raw materials or sales commissions.

Prime Cost

The combined costs of direct materials and direct labor that are directly involved in the manufacturing of a product.