If Fixed Costs Are $850,000 and Variable Costs Are 60

question 16

Multiple Choice

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars) ?

• A) $2,125,000
• B) $340,000
• C) $3,400,000
• D) $1,416,666

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Definitions:

Local Water Company

A company responsible for providing water supply and wastewater services to a specific local area or community.

Kinked Demand Curve

A market theory that suggests prices have a tendency to remain stable because competitors will match price decreases but not price increases.

Cutthroat Competition

An extremely competitive market situation where competitors use aggressive tactics to undercut each other's prices, leading to very low profit margins.

Sticky Prices

A situation in economics where the prices of goods and services are slow to respond to changes in the supply and demand.