Suppose That You Have Returned from Your Fishing Expedition with 20,000

question 5

Multiple Choice

Suppose that you have returned from your fishing expedition with 20,000 fish. The market price is $3 per fish. Your average fixed cost was $1 and your total variable cost was $5,000. If the price jumps to $3.50 before you sell your first fish, how much extra profit, if any, do you earn?

• A) c and d.
• B) Extra profit is zero.
• C) Extra profit is enough to cover half of the fixed cost of your next trip.
• D) Extra profit is enough to cover all of the variable costs of your next two trips.
• E) Extra profit is $45,000.

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Definitions:

Pension Expense

The cost of a company's pension plan, recognized in its financial statements during a specific period.

Net Amortization

The process of gradually reducing the book value of an intangible asset over its useful life.

Interest Cost

A financial charge associated with borrowing funds or the cost incurred on debt over a specific period.

IFRS

International Financial Reporting Standards are a globally-adopted set of accounting standards aimed at making financial statements comparable across international boundaries.