How Much Does Each Additional Sales Dollar Contribute Toward Profit

question 112

Multiple Choice

How much does each additional sales dollar contribute toward profit for a firm with $5 million break-even level of revenues and $1.5 million in fixed costs including depreciation?

• A) $0.30
• B) $0.33
• C) $0.50
• D) $0.67

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Definitions:

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise when the other party has relied upon it to their detriment.

Preexisting Duty

An obligation or duty that already exists under contract law and does not constitute valid consideration for a new agreement.

Rescission

The act of canceling, voiding, or annulling a contract, returning the parties to their positions prior to the contract.

Usury

Charging an illegal rate of interest.