A Company with Fixed Costs of $200,000 Per Month Believes

question 49

Multiple Choice

A company with fixed costs of $200,000 per month believes that they have this holiday season's hot selling item, a towel that folds itself into a variety of shapes so you can turn your own home into a cruise ship cabin. They believe they can sell 100,000 units and need to determine a minimum price that will cover their fixed and variable costs, with the latter being $45 per unit.

• A)$45.20
• B)$46.50
• C)$46.80
• D)$47.00

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Definitions:

Predictability

The characteristic of a process, principle, or system that enables it to be known or declared in advance, especially through the application of scientific or logical techniques.

Probability

A measure of the likelihood that an event will occur, often quantified as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Liberty

The state of being free within society from oppressive restrictions imposed by authority on one's way of life, behavior, or political views.

State

An organized political community living under a government; can also refer to the condition or mode of being.