CumChan Is Undergoing a Project That Has Fixed Costs of $2,000

question 95

Essay

CumChan is undergoing a project that has fixed costs of $2,000 per year, depreciation charges of $1,000 a year of $12,000 a year, and variable costs equal to two-thirds of revenues.If sales increase by 5 percent, what will be the increase in pretax profits?

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Definitions:

Interest Rate

Interest rate is the percentage charged or paid for the use of money, typically expressed as an annual percentage of the principal.

Real GDP

Real GDP, or real gross domestic product, measures a country's total economic output, adjusted for price changes or inflation.

Unemployment Rate

The portion of the labor group that is unoccupied with work but is actively seeking employment.

Personal Tax Rate

The percentage of an individual's income that is paid to the government as tax.