Tim Marlow, the Owner of the Clock Works, Wanted to Know

question 144

Multiple Choice

Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Marlow knew that he had total fixed costs of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor and materials. If the price Marlow charges for each of his clocks is $40, what is his break-even point quantity?

• A) 100 clocks
• B) 334 clocks
• C) 500 clocks
• D) 1,000 clocks
• E) 10,000 clocks

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Definitions:

Meaningful Units

Fundamental components of language or information that carry significance and help in understanding the whole.

George Miller

A psychologist best known for his theory that the average number of objects an individual can hold in short-term memory is 7 ± 2.

Magic Number

A concept in cognitive science referring to the short-term memory capacity of about seven items (plus or minus two).

Auditory Traces

Memory traces of auditory information that are believed to persist in the brain for a brief period after the auditory stimulus has ended.